Australian bond buying rises after Friday’s sell-off on Yellen’s hawkish comments

The Australian government bonds gained Tuesday on upswing in investor demand, following a market selloff on Friday after the Federal Reserve Chair Janet Yellen spoke at the annual Jackson Hole Symposium, hinting at rising possibilities of an interest rate hike.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell nearly 5 basis points to 1.890 percent and the yield on short-term 2-year dipped 2 basis points to 1.451 percent by 05:20 GMT.

At the Jackson Hole Symposium, Yellen said that the FOMC continues to anticipate that gradual increases in the federal funds rate will be appropriate over time to achieve and sustain employment and inflation near our statutory objectives.

She further added that in light of the continued solid performance of the labour market and the Fed’s outlook for economic activity and inflation the case for an increase in the federal funds rate has strengthened in recent months. However, Yellen furthered that of course, the Fed’s decisions always depend on the degree to which incoming data continues to confirm the Committee's outlook.

Meanwhile, the benchmark Australia's S&P/ASX 200 index traded 0.06 percent higher to 5,472.5 by 05:20 GMT.