Australian bonds jump after Q3 CPI rises lower than prior reading; Q3 PPI eyed

The Australian government bonds jumped during Asian session Wednesday after the country’s consumer price inflation (CPI) for the third quarter of this year rose lower than prior reading in Q2, however, meeting market expectations.

Further, the Q3 producer price inflation (PPI), due for release on November 1 by 00:30GMGT, will add further direction to the debt market.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged nearly 4 basis points to 1.140 percent, the yield on the long-term 30-year bond also plummeted 4 basis points to 1.716 percent and the yield on short-term 2-year traded nearly 1-1/2 basis points down at 0.821 percent by 04:35GMT.

Although headline inflation slowed slightly in Q3 compared to the previous quarter, it remained solid. In annual terms, it increased to 1.7 percent, up from 1.6 percent in Q2. The largest rise for the quarter from came international travel and accommodation prices, which rose 6.1 percent, while tobacco prices increased 3.4 percent, ANZ Research reported.

Financial markets treaded water overnight while awaiting the FOMC rate decision where a 25bp rate cut has been priced in, but uncertainty remains if it would be a hawkish rate cut with Powell signalling a wait and see mode from here, OCBC Treasury Research reported.

Meanwhile, the S&P/ASX 200 index traded tad -0.52 percent down at 6,663.50 by 04:35GMT.