Australian bonds gain on slower-than-expected rise in Q3 GDP; October retail sales data in focus

Australian government bonds gained during late Asian session Wednesday after the country’s gross domestic product (GDP) for the third quarter of this year, advanced at a pace slower than market expectations, also disappointing the previous quarter reading.

Investors will now remain focussed on Australia’s retail sales data for the month of October, scheduled to be released on December 6 by 00:30GMT for further direction in the debt market.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 4-1/2 basis points to 2.500 percent, the yield on the long-term 30-year bond hovered around 3.022 percent and the yield on short-term 2-year traded tad down at 1.963 percent by 05:00GMT.

Australia’s GDP growth slowed in Q3 to 0.3 percent q/q and 2.8 percent y/y. While public spending and net exports were strong contributors to growth, housing construction only eked out a small gain and consumption growth slowed significantly.

Business investment fell. Underlining the softness in consumption was further weakness in wages growth. Persistently low wages growth raises the risk that household income growth will not pick up enough to offset the ongoing decline in house prices and support growth in consumer spending, ANZ Research reported.

Meanwhile, the S&P/ASX 200 index traded 0.71 percent higher at 5,664.5 by 05:10GMT, while at 05:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bearish at -150.67 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex