Australian bond yields slump despite bounce-back in U.S. peer after Trump agrees to meet China’s Xi

Australian government bond yields slumped during early Asian session Wednesday despite a bounce-back in the United States counterpart after President Donald Trump agreed to meet his Chinese peer Xi Jinping at the G-20 Summit, scheduled to start next week.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged nearly 3 basis points to 1.343 percent, the yield on the long-term 30-year bond slumped 2-1/2 basis points to 1.964 percent and the yield on short-term 2-year also traded 2-1/2 basis points lower at 0.989 percent by 04:45GMT.

Global risk sentiments improved overnight as US President Trump indicated a “very good telephone conversation” with China’s Xi and the two would have an “extended meeting” at the G20 summit later this month, OCBC Treasury Research reported.

Wall Street climbed overnight with the prospect of thawing US-China trade tensions, even as US Treasury bond yields rallied, tracking the gains in the bund market on ECB’s hints of a potential policy stimulus (possibly a rate cut) which had sent the 10-year bund yield further into negative territory and closer to the ECB’s -0.4 percent deposit rate, the report added.

Meanwhile, the S&P/ASX 200 index remained 0.42 percent higher at 6,569.50 by 04:50GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 50.88 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex