Australian bonds rally on weak business conditions, expectations of upbeat employment cushion gains

The Australian bonds rallied Tuesday followed by weak business conditions across sectors that lent demand towards safe-haven buying. However, expectations of an upbeat employment report, scheduled to be released on March 15, offset further gains in the debt market.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1/2 basis point to 2.94 percent, the yield on 15-year note dived 1 basis point to 3.33 percent and the yield on short-term 2-year also traded 1 basis point lower at 1.89 percent by 04:20 GMT.

Australia’s February business conditions retraced some of the previous month’s gains, but remain at levels consistent with solid growth. Confidence also eased back slightly. Business confidence also edged down in February, alongside a further deterioration in the Federal Government’s standing in public opinion polling.

"We expect the February jobs report, out later this week, to show a solid rise in employment, but over the longer term a sharper downtrend in the unemployment rate is likely necessary for a sustained boost to households’ perceptions of their finances," ANZ Research commented in its latest research report.

Meanwhile, the ASX 200 index traded 0.32 percent down at 5,739.50 at 04:20GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained slightly bullish at 93.19 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex