Australian bonds jump tracking U.S. Treasuries after Fed Chair Powell announces increase of balance sheet

The Australian government bonds jumped tracking a similar movement in the United States’ Treasuries after Chairman of the Federal Reserve, Jerome Powell, announced an increase in the size of the central bank’s balance sheet soon.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped 1 basis point to 0.885 percent, the yield on the long-term 30-year bond also suffered 1 basis point to 1.486 percent and the yield on short-term 2-year remained tad down at 0.638 percent by 04:55GMT.

Fed chair Powell’s comments that the central bank will soon announce measures to add to the supply of reserves over time, likely to be in Treasury bills for reserve management purposes, but stressed that this was not Quantitative Easing, OCBC Treasury Research reported.

During the Q&A, he also referred to two instances in the 1990s when the Fed cut rates trice, which could be a hint that another rate cut is forthcoming. Still, US-China trade tensions loomed large – the US is imposing visa bans on Chinese officials linked to China issued a strong statement about the US move on the latest blacklist additions and Bloomberg also reported the US administration is moving ahead on discussions to restrict capital flows to China, the report added.

Meanwhile, the S&P/ASX 200 index remained nearly flat at 6,520.50 by 05:00GMT,