Australian bonds jump tracking U.S. Treasuries amid thin tracking towards start of 2020

The Australian bonds jumped during Asian session on Friday tracking a similar movement in the United States’ Treasuries amid thin trading day as markets are scheduled to witness data of little economic significance towards the start of this year.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 4 basis points to 1.261 percent, the yield on the long-term 30-year bond slumped to 1.883 percent and the yield on short-term 2-year suffered 8 basis points to 0.829 percent by 02:55GMT.

With investors still at a stage of re-positioning and re-establishing portfolios, there is no need to over-interpret the movements on the first day. The basic picture is still negative for the USD in terms of overall risk sentiment. Add to that the diminishing rate differentials between the USD and the rest of the global core yields, the USD bounce may be short-lived, OCBC reported in its Daily Market Outlook.

USD-Asia pairs bounced higher on 2020’s first trading day, but notably the USD-CNH remained quite heavy throughout. Overall, the fundamental picture – Sino-US optimism and stabilization of macro indicators – remains unchanged, and should impart implicit support for Asian currencies, the report added.

Meanwhile, the S&P/ASX 200 index traded nearly flat at 6,675.50 by 03:00GMT.