Australian bonds slump as trade deficit continues to narrow

The Australian government slumped Thursday as investors cheered better than expected trade balance data for August. Also, firmer equities continued to pressurize Treasury prices.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1 basis points to 2.177 percent, the yield on 15-year note also jumped 1 basis points to 2.541 percent and the yield on short-term 2-year climbed 1/2 basis point to 1.664 percent by 05:00 GMT.

Australia August trade deficit fell to 2,010 million, consensus expectation was for -2,300 million, revised to -2,121 million, declining from -2,410 million in July. Goods and services imports remained flat on the month (sa), with exports also unchanged m/m.

On Wednesday, Australia August retail sales climbed 0.4 percent m/m, higher than the market consensus of +0.2 percent m/m, well above July's 0.0 percent (flat) m/m result. The retail sales data has been a poor performer in recent months. The August beat is thus welcome, but it comes after many months of disappointment.

On Tuesday, the Reserve Bank of Australia in its monetary policy meeting left interest rates unchanged at 1.5 percent as it weighs the effect of past easing and the biggest-ever boom in apartment building helps underpin economic activity and jobs growth.

Meanwhile, the benchmark Australia's S&P/ASX 200 index traded 0.16 percent higher to 5,467 by 05:00 GMT.