Australian bonds plunge after RBA August meeting minutes maintain economic growth optimism

The Australian bonds plunged Tuesday after the Reserve Bank of Australia (RBA) maintained optimism in its August monetary policy meeting minutes, released today. Also, investors will now be looking forward to the July employment report, scheduled to be released on August 17 for further direction in the labor market.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 3 basis points to 2.65 percent, the yield on 15-year note also jumped nearly 3 basis points to 2.95 percent and the yield on short-term 2-year traded nearly 1 basis point higher at 1.80 percent by 03:50 GMT.

The Reserve Bank of Australia said recent data had shown further improvement in the labour market, with more full-time jobs created, higher labour force participation and an increase in average hours worked.

The central bank, which held rates steady at its August 1 meeting, noted that some employers were finding it more difficult to attract workers with certain skills and that if this were to broaden, it could see wage growth increasing more quickly than forecast, with inflationary pressures emerging more quickly as well.

Meanwhile, the S&P/ASX 200 index traded 0.28 percent higher at 5,712.50 by 04:00 GMT and the FxWirePro's Hourly AUD Strength Index remained neutral at 12.01 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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