Australian bonds jump tracking firmness in U.S. Treasuries, short-covering

The Australian bonds jumped on the last trading day of the week, tracking similar movement in the U.S. Treasuries and as investors covered previous short positions.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 4 basis points to 2.71 percent, the yield on 15-year note also plunged nearly 4 basis points to 3.01 percent and the yield on short-term 2-year traded 7 basis points lower at 1.85 percent by 04:20 GMT.

The Australian market should outperform on the media reports of the RBA neutral rate discussion, but eyes will be on the speeches from the RBA. Further, the RBA Deputy Governor, Guy Debelle said that Australian rates do not have to rise in line with global peers; Estimates neutral rate has fallen by around 150 bps since 2007.

Australia’s labour market posted another solid result in June, with a 14k rise in employment, lifting the overall rise in jobs to 168k this year. The unemployment rate came in at 5.6 percent, in line with last month’s upwardly revised outcome. Employment remains 2% higher than a year ago, and looks more in line with job advertisements and business conditions after the last few months of catch-up.

Meanwhile, the ASX 200 index fell 0.08 percent to 5,683.50 by 04:40GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 0.55 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest