Australian bonds gain following firmness in U.S. Treasuries after Trump nominates Powell for Fed Chair

Australian bonds gained Thursday following firmness in the U.S. Treasuries after President Donald Trump nominate Federal Reserve Governor Jerome Powell to lead the U.S. central bank, hinting the monetary policy would be consistent at the current pace.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 5-1/2 basis points to 2.660 percent, the yield on the long-term 30-year note also dipped 5-1/2 basis points to 3.421 percent and the yield on short-term 2-year slid 2-1/2 basis points to 1.824 percent by 02:40 GMT.

President Donald Trump plans to nominate current Federal Reserve Governor Jerome Powell as the next chair of the U.S. central bank, a source familiar with the matter said on Wednesday.  The announcement is expected on Thursday.  Powell, 64, was already seen as the frontrunner for the job, with a White House source told Reuters on Monday that he was the likely pick. The Wall Street Journal, citing a person familiar with the matter, reported earlier on Wednesday that the White House had notified Powell that Trump intended to nominate him for the post.

Overnight, the Federal Open Market Committee left the fed funds rate unchanged in a 1.00-1.25% range, in line with market expectations. According to the statement, information received since the September FOMC meeting indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate despite hurricane-related disruptions.

Additionally, the statement noted that gasoline prices rose in the aftermath of the hurricanes, boosting overall inflation in September; however, inflation for items other than food and energy remained soft. On a 12-month basis, both inflation measures have declined this year and are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

As was the case previously, the statement noted that near-term risks to the economic outlook appear roughly balanced. However, the Committee is monitoring inflation developments closely. IDEA: there were no dissenting votes at the September meeting.

Meanwhile, the S&P/ASX 200 index traded 0.28% lower at 5,918.5 by 02:40 GMT, while at 02:00GMT, the FxWirePro's Hourly AUD Strength Index remained slightly bullish at 83.66 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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