Australian bonds narrowly mixed in subdued session; markets await U.S. November employment report

Australian government bonds traded narrowly mixed across the curve during Asian session on Friday as investors remain sidelined in any big deal amid lack of any major domestic events. Still, the sentiment was weighed down after the arrest of Huawei’s CFO raised concerns of inflaming US-China tensions.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 1/2 basis point to 2.464 percent, the yield on the long-term 30-year bond also climbed 1/2 basis point to 2.994 percent and the yield on short-term 2-year down 1/2 basis point to 1.930 percent by 04:10GMT.

“Yields on U.S. Treasuries fell as weaker sentiment supported demand for safe-haven bonds. A softer run of economic data overnight and further commentary from the Fed may have also kept down yields, as markets raised further doubts of more Fed rate hikes next year. The U.S. 10-year yields were down 3 basis points to 2.88 percent while two-year yields were down 4 basis points to 2.76 percent,” noted St.George Bank.

The U.S. shares ended mixed. Bond yields and the U.S. dollar were lower. The Australian dollar was weighed down by the softer risk environment.

On Thursday, retail sales grew 0.3 percent in October, after a growth of 0.2 percent in September. Annual growth stepped down from 3.7 percent in September to 3.5 percent in October - just slightly below the long-run average. Australia’s trade surplus narrowed from $2.9 billion in September to $2.3 billion in October, as imports jumped 3.2 percent and exports rose a smaller 1.5 percent.

In a speech last night, RBA Deputy Governor Debelle reaffirmed that the RBA’s expectations for “the next move in monetary policy was more likely up than down, though it is some way off”.

Lastly, markets await the U.S. November employment report scheduled to be released today at 13:30 GMT.

Meanwhile, the S&P/ASX 200 index traded 0.53 percent higher at 5,682.5 by 04:20 GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -32.12 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex