Australian bonds trade narrowly mixed in quiet session; eyes on Q4 CPI data and FOMC

Australian government bonds traded narrowly mixed on Monday as investors remained sidelined in any major trading activity amid a silent session that witnessed no data of major economic importance. However, investors would wait for the last-quarter inflation data, which is scheduled to be released on January 31.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded flat at 2.839 percent, the yield on the long-term 30-year note slid 2 basis points to 3.460 percent and the yield on short-term 2-year rose 1/2 basis point to 2.093 percent by 03:20 GMT.

The last quarter inflation data is widely expected to gain 0.7 percent q/q, higher the third-quarter reading of 0.6 percent q/q. On a yearly basis, it is anticipated to come at 2 percent y/y, up from previous 1.8 percent y/y. This upbeat data should give the Reserve Bank of Australia (RBA) little relief on the inflation front, also, booting expectations of an interest rate hike by end of this year.  

In the United States, Treasuries initially edged higher from their dampened overnight levels following the release of weaker than expected advance Q4 2017 GDP data, contrasted by stronger than expected durable goods orders for December. These modest gains faded as the session progressed with little in the way of supporting momentum amidst a relatively light news flow. Markets now look ahead to a greater flow of data in the week ahead, highlighted by the FOMC rate decision on Wednesday, where it is widely expected to leave the interest rate unchanged, amidst little change on overall communication from the committee and the January employment report on Friday.

Meanwhile, the S&P/ASX 200 index traded 0.07 percent higher at 6,024.5 by 03:30 GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 20.24 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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