Australian bonds jump in muted trading session ahead of RBA’s Financial Stability Review

Australian government bonds jumped on the first trading day of the week Monday amid a muted session that witnessed data of little economic significance ahead of the Reserve Bank of Australia’s (RBA) Financial Stability Review, scheduled to be released by end of this trading week, which shall provide further direction to the debt market.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 3-1/2 basis points to 1.867 percent, the yield on the long-term 30-year bond also plunged 3-1/2 basis points higher to 2.491 percent and the yield on short-term 2-year too traded nearly 3-1/2 basis points lower at 1.478 percent by 03:50GMT.

Friday’s US nonfarm payrolls data surprised on the upside at 196k (forecast: 177k) in March while the February data was also revised up from 20k to 33k (net two month revision was +14k).

The US’ unemployment rate was unchanged at 3.8 percent, with the average hourly earnings rising by a subdued 0.1 percent m/m (3.2 percent y/y) which should reinforce the Fed’s “patient for longer” stance.

Crude oil prices also pushed higher amid Libyan supply concerns, whilst White House advisor Kudlow kept up the positive rhetoric on the US-China trade talks saying that the two countries are moving “closer and closer” to a trade deal and talks will continue this week via “a lot of teleconferencing”.

Lastly, Asian markets may trade with a firm tone this morning, following the robust US labour market prints.

Meanwhile, the S&P/ASX 200 index traded flat at 6,199.50 by 03:55GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bullish at 101.147 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex