Australian bonds gain as global stocks slide to 3-month low; UST 10-year yield down over 7 basis points

Australian government bonds gained across the curve during Asian session on Thursday after global stocks slide to 3-month low, with the S&P500 stock index tumbling over 3 percent to its biggest one-day fall since February.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell over 3 basis points to 2.730 percent, the yield on the long-term 30-year bond also plunged 3 basis points to 3.207 percent and the yield on short-term 2-year down 1-1/2 basis points to 2.028 percent by 03:50GMT.

Share markets around the world tumbled hard overnight. The Dow Jones fell -3.1 percent, which in percentage daily terms is the biggest fall since early February same as the S&P 500 index. Across in Europe and the Euro Stoxx 50 index closed -1.7 lower.

In the United States, the U.S. 10-year Treasury yield fell 7 basis points to over 1-week low of 3.142 percent.

“Risk appetite continues to dampen towards the end of the week, with the S&P500 index closing lower by 3.29 percent, the most since February whilst U.S. government 10-year Treasury yields declined by around 4bps. This happens just a day before the start of America’s third-quarter earnings seasons as signs begin to mount that companies may not be able to deliver the runaway growth that has been expected for most of 2018,” noted OCBC Bank.

“Investors may have also feared that profits could be hurt by the ongoing US-China trade war, which is happening at the same time as borrowing costs rise. Meanwhile, President Trump called the Federal Reserve “crazy” for its decisions to raise interest rates this year and further stated that “the Fed is making a mistake.”

For today’s economic calendar, look out for US CPI data, US initial jobless claims and CPI prints in multiple European countries such as France, Spain, Portugal and Sweden. It will be a quiet data day in Australia and New Zealand.

Meanwhile, the S&P/ASX 200 index traded 0.41% lower at 5,891.5 by 04:00 GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained slightly bearish at -86.56 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex