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Australian 10-year bond yields sink to 3-week low after December retail sales worsen, RBA stays pat on policy decision

Australian 10-year government bond yields sank to a 3-week low Tuesday after the country’s retail sales for the month of December worsened below market expectations. Also, the Reserve Bank of Australia (RBA) delivered in line with market consensus, remaining on hold at its monetary policy meeting concluded early today.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 14-1/2 basis points to 2.76 percent, the yield on the long-term 30-year note plunged 12-1/2 basis points to 3.40 percent and the yield on short-term 2-year traded nearly 6-1/2 basis points lower at 1.99 percent 04:25GMT.

Thursday’s figures from the Australian Bureau of Statistics (ABS) showed retail sales eased 0.5 percent in December, from November when they rose a solid 1.3 percent led by Black Friday discounts. Economists polled by Reuters had predicted a 0.2 percent fall.

The Reserve Bank of Australia has left the official cash rate on hold at a record low 1.5 percent at its first meeting of the year, citing continuing concerns about weak household consumption. The central bank said data over the summer had been consistent with its central forecast for gross domestic product growth to pick up to average a bit above 3 percent over the next couple of years.

Meanwhile, the S&P/ASX 200 index traded 1.07 percent lower at 5,761.5 by 04:30 GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bearish at -154.34 (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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