Australian bonds jump following drop in inflation expectations; investors defy fall in April jobless rate

The Australian bonds jumped Thursday, following a drop in the country’s inflation expectations for the month of May. However, investors have largely shrugged off the fall in the unemployment rate for the month of April.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped nearly 3-1/2 basis points to 2.50 percent, the yield on 15-year note also plunged almost 3-1/2 basis points to 2.90 percent and the yield on short-term 4-year traded 1/2 basis point lower at 1.99 percent by 05:00 GMT.

Australia’s employment rose 37.4k in April, following the 60k gain in March. Within the headline figure, the mix of full-time/part-time jobs was a little less favourable, with full-time jobs declining by 11.6k. This drop has to be viewed against the 75k jump in full-time jobs in March, however.

In contrast, the unemployment rate dropped back to 5.7 percent in April, after it rose to 5.9 percent in February and remained at that level despite the strong employment gain in March. At 5.7 percent, the unemployment rate is still above its recent cyclical low of 5.6 percent reached in October and well above the 4.9 percent level reached in mid-2011.  It is, however, down from the cyclical high of 6.3 percent last seen in July 2015, though underemployment remains high.

Meanwhile, the ASX 200 index traded 0.10 percent up at 5,726.50 by 05:40GMT, while at 05:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 54.32 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex