Australian bonds strengthen following recovery in U.S. Treasuries, ASX 200 jumps on firm energy prices

The Australian government bonds strengthened Tuesday following a recovery in the United States Treasury prices. Also, benchmark Australia's S&P/ASX 200 jumped on rallying crude oil prices.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell more than 3 basis points to 2.67 percent, the yield on 15-year note dipped 4-1/2 basis points to 3.06 percent and the yield on short-term 2-year slid 1-1/2 basis points to 1.80 percent by 04:40 GMT.

The Australian bonds have been closely following developments in the U.S. debt market. The United States benchmark 10-year Treasury yield tumbled 2 basis points to 2.31 percent.

Crude oil prices recovered on rising consensus that the OPEC will find a way to reduce production. The International benchmark Brent futures rose 0.98 percent to $49.38 and West Texas Intermediate (WTI) jumped 3.94 percent to $47.49 by 04:40 GMT.

Markets will remain keen to focus on the upcoming assistant governor for economics Christopher Kent speech on economic developments across Australia's states for future market directions.

Last week, the Reserve bank of Australia in its November meeting minutes mentioned that the underlying inflation is expected to return to normal levels over time and the Australian economy is seen growing close to potential over the next few quarters, before picking up further.

Further, the minutes repeated that a rising Australian dollar could complicate the economic transition and holding policy rate steady in November meeting was consistent with growth and inflation goals. It further mentioned that a steadier Chinese economy had reduced downside risks to the global growth outlook, while risks to global inflation outlook more balanced than for some time.

Meanwhile, the benchmark Australia's S&P/ASX 200 index traded 0.61 percent higher to 5,425.5 by 04:40 GMT. While at 04:00 GMT, the FxWirePro's Hourly Australian Dollar Strength Index stood neutral at -19.99 (lower than the range of -75 for bearish trend).