Australian bonds remain flat in thin trading session amid Thanksgiving holidays

Australian government bonds traded flat across the curve during Asian session on Friday as investors remained on the sidelines in any big deal amid lack of any major domestic events and Thanksgiving holiday-thinned trading.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, traded nearly flat at 2.663 percent, the yield on the long-term 30-year bond also traded steady at 3.182 percent and the yield on short-term 2-year remained flat at 2.051 percent by 03:30GMT.

The main event yesterday was an agreement between the UK and EU to a draft Brexit deal, but otherwise, it was thin trading thanks to the U.S. Thanksgiving holiday. Despite Brexit progress, there was a slight sense of risk aversion in markets. European shares weakened. Sterling jumped on the Brexit draft agreement.

“It was quiet with U.S. bond markets closed and German bunds little changed. Yields lifted in the UK on Brexit hopes. Futures on Australian bonds imply a slight lift in 3 and 10-year bond yields,” noted St.George Bank.

It is a quiet day ahead domestically. No data or RBA activity today.

“European bourses were in the red, down 0.8-1.3 percent with trading volumes low. GBP responded positively to Brexit headlines. The Italian yield curve steepened with 2-year down 11 basis points following some more encouraging noises from Italy’s politicians. Both Salvini and Di Maio indicated they were prepared to talk to the EU following Wednesday’s criticism that the budget was in serious breach of the fiscal rules,” noted economists at ANZ.

“Italy will want to avoid excessive deficit procedures against its budget given the negative market and growth implications. However, the 10-year Italian BTP-German bund spread was little changed at 307bps, indicating the market still remains skeptical. Oil gave back some of its recent bounce with WTI falling 1.3 percent. Gold was little changed.”

Meanwhile, the S&P/ASX 200 index traded 0.79 percent higher at 5,718.5 by 03:30 GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -66.95 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex