Australian bonds slide tracking U.S. Treasuries post upbeat economic data

The Australian government bonds slid on the last trading day of the week, tracking weakness in the U.S. counterparts, following a series of strong economic data, released late Thursday. The fall in the number of initial jobless claims amid the Reserve Bank of Australia’s (RBA) slightly upbeat quarterly forecast released early today, added to the disappointment in safe-have assets.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose nearly 1-1/2 basis points to 2.66 percent, the yield on 15-year note also climbed over 1 basis point to 3.07 percent and the yield on short-term 2-year traded 1-1/2 basis points higher at 1.73 percent by 05:40 GMT.

Initial jobless claims in the U.S. dropped considerably in the week ended 29 April. Jobless claims dropped 19,000 to 238,000, reversing slight weakness that was seen emerging last week. The figure is below consensus expectations of 248,000. After reaching a low point of 227,000 in early February, initial claims data have moved between the low 230s and the low 260s.

Today’s Statement on Monetary Policy continued to reveal an RBA still cautiously upbeat on the outlook. Indeed, the RBA said that it had “increased confidence” in its forecasts for a pickup in inflation.

Changes to growth and inflation forecasts were few and only minor. The broader outlook remains unchanged. The RBA, however, seemed more positive in its forecasts given that domestic growth had picked up in the March quarter, the global backdrop had improved and that the terms of trade had held up higher than expected.

Meanwhile, the ASX 200 index traded 0.67 percent down at 5,817.50 by 05:40GMT, while at 05:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -53.22(a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex