Australian bonds start week on a disappointing note despite trade, growth concerns

Australian government bonds started week on disappointing note across the curve during Asian trading session Monday despite worries surrounding the U.S.-China trade war and slowing global economic growth. That fall in short-term bond prices was largely due to gains in iron ore prices, the country's top export earner.

Still, investor risk appetite remained low on the fear of another U.S. government shutdown.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose  about 1/2 basis point to 2.098 percent, the yield on the long-term 30-year bond also climbed 1/2 basis point to 2.66 percent and the yield on short-term 2-year jumped 2-1/2 basis points to 1.74 percent by 03:50 GMT.

According to a Reuters report, China iron ore futures rose to a record on Monday, the first session after a week-long national holiday, on concerns that supply from Brazil. The iron ore futures for May delivery on the Dalian Commodity Exchange rose to their daily trading limit when the market opened at 0100 GMT, hitting a record of 652 yuan ($96.30) a tonne.

However, investor sentiment remained under pressure on Friday night amid concerns about US-China trade negotiations and the risk of another US government shutdown. Investors await the outcome of high-level trade talks between the US and China in Beijing later this week, noted St. George Bank.

“The U.S. government bond yields fell as dampened risk appetites enhanced the safe haven appeal of government bonds. The yield on the 10-year U.S. government bond fell by 2 basis points to 2.63 percent. The yield on the 2-year U.S. government bond fell by 1 basis point to 2.47 percent.”

With Chinese markets reopening after a week-long holiday, their reaction to trade talks will shape the debt market.

On the currency, ANZ noted “the AUD consolidated at its recent lows. Focus today will be on China, where markets resume after the holiday week and where credit data are released. We continue to think it too soon for China to provide a sustained boost to the AUD.”

Meanwhile, the S&P/ASX 200 index traded 0.40 percent lower at 5,990.50 by 04:00 GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -66.97 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex