Australian bonds trade nearly flat in subdued session; markets eye upcoming G20 meeting

Australian government bonds traded nearly flat across the curve during Asian session on Wednesday as investors remain sidelined in any big deal amid lack of any major domestic events. However, market participants will remain focused on the upcoming G20 meeting.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, traded flat at 2.694 percent, the yield on the long-term 30-year bond remained steady at 3.229 percent and the yield on the short-term 2-year flat at 2.066 percent by 04:00GMT.

Risk appetites weakened further overnight, with stock market losses and a sharp fall in the oil price setting the tone.

“The move in US bond yields was less pronounced, with a slight flattening of the yield curve. The yield on the 10-year US government finished unchanged at 3.06 percent. The yield on the 2-year US government bond lifted from 2.78-2.80 percent,” noted St.George Bank.

Moreover, the Australian dollar is on the back foot as global equities continue to sell off. The market appears less sensitive to Sino-U.S. headlines, and even rate hikes being priced out are not shoring up confidence. "ANZ remains defensive on AUD".

“Rates markets remained within the recent ranges overnight and the Australian market should do the same today. The next few days see a number of bond maturities leaving cash in the system,” economists at ANZ noted.

Meanwhile, the S&P/ASX 200 index traded 0.61 percent higher at 5,643.5 by 04:00 GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -17.60 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex