Australian bonds suffer amid muted trading session, still tracking U.S. Treasuries

Australian government bonds suffered on the last trading day of the week Friday amid a muted session that witnessed data of little economic significance, still tracking a surge on the U.S. Treasury yields, following Fed’s comments on inflation at its latest monetary policy meeting.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 1-1/2 basis points to 1.796 percent, the yield on the long-term 30-year bond hovered around 2.420 percent and the yield on short-term 2-year remained tad higher at 1.333 percent by 04:50GMT.

Global risk appetite has turned more sober post-FOMC as traders digested Powell’s “transient” inflation trajectory and are awaiting tonight’s key US nonfarm payrolls, unemployment and wage data (with market eyeing 190k, 3.8 percent and 3.3 percent respectively, versus March readings of 182k, 3.8 percent and 3.2 percent), OCBC Treasury Research reported.

The S&P500 closed lower again amid oil price slippage on supply concerns, while the 10-year UST bond yield was little changed at 2.54 percent.

Fixed income markets were steadier in the aftermath of the volatility that surrounded the FOMC statement and press conference on Wednesday. Money markets are digesting the clear message from the Fed that it is a long way from cutting interest rates any time soon. Real private final demand is expected to strengthen in coming months. In a low inflation environment, that positive growth backdrop is being well received by both credit and equity markets, ANZ Research reported.

Meanwhile, the S&P/ASX 200 index traded tad lower at 6,324.5 by 04:55GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -62.49 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex