Australian bonds gain on dovish comments from RBA Governor Lowe, OPEC meeting in focus

The Australian government bonds gained Monday following the dovish comments from the Reserve Bank of Australia Philip Lowe. Also, debt market is likely to remain volatile ahead of the OPEC informal meeting this week in Algiers.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 2-1/2 basis points to 2.026 percent, the yield on long-term 15-year note also dipped 3 basis points to 2.378 percent and the yield on short-term 2-year slid 1 basis point to 1.610 percent by 04:40 GMT.

Reserve Bank governor Philip Lowe said that the central bank will be forced to cut its official cash rate further if the economy continues to deteriorate further. Also, he believes Australia’s economy does not warrant lower rates, but he has left open the possibility that he may be forced into it by the monetary policy action of central banks elsewhere, reported The Australian.

On the other hand, Lowe is optimistic about the Australian outlook. Commodity prices have been firmer this year and the wind down of investment in the resources sector will be completed early next year, they added.

Lastly, investors will also remain keen to focus on the upcoming OPEC informal meeting this week in Algiers. It is uncertain that a deal can be reached on freezing or cutting output.

Meanwhile, the benchmark Australia's S&P/ASX 200 index traded 0.41 percent higher to 5,418.5 by 04:40 GMT.