Global central banks’ easing frenzy drags Australian 10-year bond yield to 1-month low

The Australian 10-year government bond yield slumped to 1-month low during Asian session Friday tracking a similar movement in the United States Treasuries amid surging safe-haven demand as global central banks’ are in a policy easing fanzy.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, dipped 3-1/2 basis points to 0.894 percent, the yield on the long-term 30-year bond fell over 3 basis points to 1.512 percent and the yield on short-term 2-year down about 2 basis points lower at 0.631 percent by 04:15GMT.

Bond yields fell as poor economic data heightened market expectations for more Fed easing. The U.S. 2-year yield fell for the 6th consecutive session, down 9 basis points to 1.39 percent and the 10-year lost 6 basis points to 1.53 percent. Futures pricing for a cut at the October FOMC meeting has risen from around a 40 percent probability at the end of last week to 85 percent as of this morning. More dovish comments from two more Fed board members overnight have also boosted expectations, OCBC Treasury Research reported.

Australian interest rates fell. The 10-year bond yield was 4 basis points lower to 0.92 percent and the 3-year bond currently has a yield of about 0.61 percent, the OCBC report added.

“Brexit, impeachment, trade war, Hong Kong, Iran, manufacturing recession, investment uncertainties, negative rates, tech valuation, there is no shortage of event risks in the horizon, making investors understandably listless. Flight to safety is back on, with government bonds and gold rallying,” noted Taimur Baig, chief economist at DBS.

Meanwhile, the S&P/ASX 200 index remained tad -0.04 percent down at 6,495.50 by 04:20GMT.