Australian bonds tad gain amid stable trading session; U.S. President Trump divided on China trade deal

Australian government bonds remained tad higher during Asian session of the second trading day of the week Tuesday amid a stable session that witnessed data of little economic significance. Today, the U.S. markets will return to trade after a long weekend, following yesterday’s Memorial Day holiday.

Key overnight news was that the United States President Donald Trump opined the country is “not ready” to make a trade deal with China yet, but “they probably wish they made the deal that they had on the table before they tried to renegotiate it”. 

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, slipped 1-1/2 basis points to 1.539 percent, the yield on the long-term 30-year bond suffered 2 basis points to 2.206 percent and the yield on short-term 2-year edged nearly 1-1/2 basis points lower to 1.132 percent by 03:55GMT.

US markets were closed for holiday yesterday, whilst European bourses rose following the weekend European Parliament elections. The exception was Italy where it may face a EUR3.5 billion fine from the European Commission for failing to rein in its debt, OCBC Treasury Research reported.

Brent recovered yesterday by 2.1 percent, closing above $70/bbl once again – less than a week after it tumbled to as low as $67.76/bbl on Thursday. Tight supplies, continue to hold up crude oil prices and we think it is unlikely that energy prices may repeat the collapse seen in Q4 at this stage, the report added.

Meanwhile, the S&P/ASX 200 index remained nearly steady at 6,457.5 by 04:05GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bullish at 146.70 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex