• Australian 10-year bond yield dips to nearly 3-week low as threat of trade war intensifies; ASX200 down 0.80 pct

    Source: FxWire Pro - Commentary / 18 Jun 2018 00:37:02   America/New_York

    Australian government bonds rallied on first trading day of the week Monday after the threat of a US-China trade war intensified over the weekend.

    The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 3-1/2 basis points to 2.668 percent (nearly 3-week low), the yield on the long-term 30-year Note dipped 4 basis points to 3.185 percent and the yield on short-term 2-year down 4 basis points to 2.002 percent by 04:00 GMT.

    Bonds markets witnessed heavy buying after the world’s second-largest economy, China announced at the weekend that it would retaliate against new US tariffs on USD50 billion in Chinese imports that will go into effect within days, taking the world’s two largest economies to the brink of a full-scale trade war.

    Government bond yields were mostly lower today. The yield on the benchmark 10-year US Treasuries fell 2 basis points to 2.906 percent, while that on the equivalent Australian notes was down 3bps at 2.66 percent. The yield on 10-year Japanese government bonds was up 1bp at 0.029 percent.

    On the other hand, figures from the Australian Bureau of Statistics (ABS) released last week showed Australian employment rose by lower-than-expected in May with gains led wholly by part-time work while the jobless rate ticked down to its lowest since November, a mixed outcome that points to tepid wages growth. The unemployment rate eased to 5.4 percent from 5.6 percent in April. It has remained between 5.4 percent and 5.6 percent for almost a year now.

    Meanwhile, the S&P/ASX 200 index traded 0.77 percent lower at 6,050.5 by 04:20 GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained slightly bearish at -135.90 (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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