Australian bonds nearly flat in subdued trade; retail sales in focus

The Australian government bonds traded nearly flat Wednesday, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 1.890 percent mark and the yield on short-term 2-year remained steady at 1.449 percent by 04:40 GMT.

In terms of recent economic data, Australia’s July private sector credit rose 0.4 percent m/m, market expectations was for 0.4 percent m/m, as compared to 0.2 percent in June. Moreover, it climbed 6.0 percent y/y, lower than the expectations of 6.1 percent, from 6.2 percent same period a year ago.

Moreover, the Australian bonds have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the Reserve Bank of Australia's target. Crude oil prices declined as the US dollar rallied and oversupply worries grew amid forecasts for higher US crude inventories.

Iran said it would only cooperate in talks to freeze output if other exporters recognized its right to full regain market share. Also, data showed that Iraq is producing 3.205 million barrel per day in August compared to 3.202 million barrel per day in July. The International benchmark Brent futures fell 0.06 percent to $48.77 and West Texas Intermediate (WTI) dipped 0.03 percent to $46.30 by 04:40 GMT.

Lastly, investors will remain keen to focus on the upcoming economic data, highlighted by retail sales and private capital expenditure.

Meanwhile, the benchmark Australia's S&P/ASX 200 index traded 0.80 percent lower to 5,421.5 by 04:40 GMT.