Australian bonds slump on first trading day ahead of RBA’s monetary policy decision

Australian government bonds slumped during Asian session on the first trading day of the week Monday ahead of the Reserve Bank of Australia’s (RBA) monetary policy decision, scheduled to be unveiled on November 6 by 03:30GMT.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped 3-1/2 basis points to 2.732 percent, the yield on the long-term 30-year bond surged 5 basis points to 3.254 percent and the yield on short-term 2-year traded nearly flat at 2.050 percent by 04:20GMT.

According to a preview from Nomura, "We expect the RBA to again announce an unchanged cash rate and anticipate that its press release will contain mixed comments. It is, however, likely to repeat that it expects to achieve its growth and inflation objectives over time, based on current policy settings. The press release may provide clues to any forecast revisions in the Quarterly Statement on Monetary Policy (SOMP) released on Friday 9 November. Here, we expect to see an unchanged growth profile, with GDP growth still "a bit above 3 percent"; a slightly lower unemployment rate forecast and a largely unchanged inflation profile. We retain a low-conviction call for a 25bp rate hike in August 2019, but note that this will require some evidence of stronger inflation pressures in the interim."

Meanwhile, the S&P/ASX 200 index traded 0.04 percent higher at 5,797.5 by 04:30GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 65.79 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex