Australian bonds rally ahead of RBA’s monetary policy statement; U.S. Presidential election uncertainties lend support

The Australian government bonds rallied Thursday ahead of the Reserve Bank of Australia’s (RBA) monetary policy statement, which is scheduled to be released Friday morning. Also, growing uncertainties over the U.S. presidential election sparked demand for safe-haven buying.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 4 basis points to 2.309 percent, the yield on 15-year note also dipped 4 basis points to 2.675 percent and the yield on short-term 2-year slid 1/2 basis point to 1.638 percent by 04:40 GMT.

The market is wary of a Brexit-like outcome at the presidential election on November 8 as recent polls showed a tighter race between the two Presidential candidates. The RealClearPolitics poll displayed that Democratic nominee Hillary Clinton’s lead over her Republican rival Trump has narrowed down to 2.2 percentage points from more than 7 points two weeks ago.

Treasury prices rallied this week as investors assume that the triumph of Republican Party nominee Donald Trump over Democratic Clinton will weaken the greenback against major trading currencies, while boosting demand for safe-haven assets.

Moreover, it is highly likely that the RBA will still downgrade its inflation profile in the November 4 Statement of Monetary Policy as the latest inflation result remained below the central bank’s implied quarterly forecast.

The Reserve Bank of Australia maintained its key benchmark rate at a record low of 1.50 percent in its November 1 monetary policy meeting, judging that unchanged policy is consistent with growth and inflation targets.

Meanwhile, the benchmark Australia's S&P/ASX 200 index traded 0.65 percent higher at 5,197.5 by 05:00 GMT.