Australian bonds surge ahead of RBA meeting minutes, Governor Lowe’s speech

The Australian government bonds surged at the start of the week on Monday as investors wait to watch the Reserve Bank of Australia’s (RBA) meeting minutes, scheduled to be released early Tuesday. Also, markets will then, focus on the central bank Governor Philip Lowe’s speech, due on February 22.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1-1/2 basis points to 2.80 percent, the yield on 15-year note slumped nearly 2 basis points to 3.24 percent and the yield on short-term 2-year also plunged 2 basis points to 1.84 percent by 03:50 GMT.

The January labour force release reported broadly as expected employment growth of 13.5k, with the unemployment rate dropping a touch to 5.7 percent. The mix of employment growth tempered the outcome, however, with full-time jobs dropping a sharp 45k.

This decline comes after three months of full-time gains, which in turn followed the very weak result for September. Those wanting a negative take on the labour market will focus on the fact that over the past 12 months 56k full-time jobs have been lost even as just over 100k jobs have been added. We do note that hours worked rose overall for the month.

"The January employment data has no impact on our view that the RBA is on hold for an extended period. While the strong lift in business conditions this week points to better times ahead, there is still spare capacity in the labour market. Thus we are still some way off from expecting a lift in domestic inflation pressures that will necessitate a shift away from a neutral stance," ANZ said in its latest research report.

Meanwhile, the ASX 200 index traded 0.25 percent down at 5,741.50 at 05:50GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -9.97 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex