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Australian government bonds traded tad lower during Asian session Tuesday as investors’ risk appetite showed signs of improvement, tracking a similar movement in the United States’ Treasuries.
Risk appetites among investors improved overnight, helped by encouraging political developments in the UK and U.S.. The lift in sentiment spurred equities higher and caused bond prices to sell off. The USD was also slightly firmer, St. George Economics noted in its Morning Report.
The yield on Australia’s benchmark 10-year note, which moves inversely to its price, hovered around 2.632 percent, the yield on the long-term 30-year bond traded flat at 3.156 percent and the yield on short-term 2-year traded nearly steady at 2.030 percent by 03:20GMT.
US Treasury yields rose overnight ahead of a slew of US Federal Reserve speakers, which includes the Chair Jerome Powell. The US 10-year treasury yield rose from 3.04 percent to 3.07 percent and the 2-year yield rose from 2.81 percent to 2.83 percent. Fed fund futures repriced the chance of the next rate hike on December 19 at 80 percent (from 75 percent).
Further, in a speech yesterday, Reserve Bank (RBA) Assistant Governor Kent indicated regulatory measures had tightened the supply of credit, which had impinged on demand for housing, the report added.
In addition to tighter credit supply, Kent indicated there are several other reasons for the slowdown in house prices. These reasons include an increase in the supply of housing (as a result of high levels of construction in some capital cities), weaker foreign demand and the earlier very substantial run-up in house prices.
Meanwhile, the S&P/ASX 200 index traded 0.25 percent lower at 5,710.5 by 03:20GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -67.41 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex
