Australian bonds jump tracking U.S. counterpart following disappointment in August employment data

Australian bonds jumped during Asian session Friday tracking a similar movement in the United States Treasuries following disappointment over U.S. employment data for the month of August, released late yesterday.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slumped 2 basis points to 2.551 percent, the yield on the long-term 30-year bonds also plunged 2 basis points 3.056 percent and the yield on short-term 2-year traded 1-1/2 basis points lower at 1.984 percent by 03:40GMT.

The United States' ADP employment rose 163k in August, below the consensus estimate of 200k, suggesting some moderation in employment growth. Other jobs data, however point to further tightening of the labour market. Initial jobless claims rose 203k for the week ending September 1. The widely-watched non-farm payrolls report is expected to come in at 191k in August, St George Economics noted in its latest Morning Report.

Further, New York Fed President Williams said that current economic conditions are “as good as it gets” and that the Fed could be “relative patient and allow this economy to continue to grow”.

In other Fedspeak, Chicago Federal Reserve President Evans said that the Fed would need to hike rates “a bit beyond neutral”. Estimates for the neutral rate by Fed officials range from 2.0 to 3.5 percent, but there is a high degree of uncertainty regarding where it actually is, the report added.

Meanwhile, the S&P/ASX 200 index traded 0.54 percent lower at 6,157.5 by 03:50GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bearish at -174.76 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex