Australian bonds slump tracking U.S.-China trade optimism; RBA keeps rate unchanged

The Australian government bonds slumped during Asian session of the second trading day of the week Tuesday tracking investors’ improved optimism over the U.S.-China trade deal. Meanwhile, the Reserve Bank of Australia (RBA) remained unchanged in its monetary policy decision, revealed early today.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped nearly 5 basis points to 1.120 percent, the yield on the long-term 30-year bond surged nearly 5 basis points to 1.796 percent and the yield on short-term 2-year gained 3-1/2 basis points to 0.899 percent by 04:05GMT.

FT reports that the Trump administration officials are considering whether to remove some existing tariffs on Chinese goods, as part of a concession for the partial “Phase 1” trade deal, OCBC Treasury Research noted.

The rollback in discussion appears to surround the September 1st 15 percent tariffs that were placed on USD112 billion of Chinese imports on goods such as clothing, appliances and flat screen monitors. If true, this suggests a significant softening of stance on the US side, given that the news flow before this was primarily about whether US would pause on applying new tariffs, such as the one planned for December 15, rather than rolling back tariffs that have already been applied, the report added.

Meanwhile, the S&P/ASX 200 index slipped -0.30 percent to 6,676.50 by 04:10GMT.