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Australian government bonds remained nearly flat during Asian trading session Wednesday after the country’s consumer price inflation (CPI) for the second quarter of this year edged tad higher, compared to market expectations as well as the previous quarter.
Investors will now look forward to the release of Australia’s retail sales data for the month of June, scheduled for end of this week, for further direction in the debt market.
The yield on Australia’s benchmark 10-year note, which moves inversely to its price, hovered around 1.202 percent, the yield on the long-term 30-year bond plunged remained nearly flat at 1.864 percent and the yield on short-term 2-year also remained steady at 0.859 percent by 05:05GMT.
Q2 headline inflation rebounded after being flat in Q1. In annual terms, it increased to 1.6 percent (from 1.3 percent in Q1). The largest positive contributions for the quarter came from fuel prices rising 10.2 percent, international holiday travel and accommodation increasing by 2.7 percent and tobacco prices rising 2.4 percent. Partly damping these increases were fruit and vegetables prices falling 2.8 percent and electricity prices coming off 1.7 percent, ANZ Research reported.
Global risk appetite may be constrained by US president Trump’s lashing out at China as a “rip off” and for failing to buy sufficient agricultural goods which dampened market expectations for the ongoing US-China trade talks, OCBC Treasury Research reported.
Wall Street slipped on renewed trade tensions, while UST bonds continued to tread water with the 10-year UST bond yield at 2.06 percent ahead of FOMC. If the FOMC delivers the widely expected 25bps cut, it may be “buy the rumour sell the fact” unless there is a surprise 50bps cut and/or Fed chair Powell clearly articulates that they are not done yet with the insurance cuts beyond the next 25bp cut, the report added.
Meanwhile, the S&P/ASX 200 index remained flat at 6,756.50 by 05:10GMT.
