Australian bonds decline following weakness in U.S. Treasuries, investors eye Yellen’s testimony

The Australian government bonds declined on the first day of the trading week, tracking weakness in U.S. Treasuries and as investors wait to watch the Federal Reserve Chair Janet Yellen’s testimony scheduled to be held on Tuesday at 15:00GMT.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 1 basis point to 2.71 percent, the yield on 15-year note also jumped nearly 1 basis point to 3.15 percent and the yield on medium-term 6-year rebounded 1 basis point to 2.35 percent by 04:30 GMT.

Yellen’s testimony is likely to throw signals as to whether the central bank is considering an interest rate hike in its March monetary policy meeting and whether officials’ economic outlook is set to improve.

Further, she also could face tough questions over the Fed’s regulatory regime, as Republicans in Congress and the new administration are committed to reining in financial regulations, reports said.

Lastly, the RBA foresees wages growth to be broadly unchanged this year, as some of the factors which have been holding down wages dissipate, after which it picks up gradually over 2018 and 2019. With the RBA now expecting underlying inflation to move into the middle of the target band by the end of the forecast period, the bank seems firmly on hold.

Meanwhile, the ASX 200 index traded 0.51 percent higher at 5,705.50 at 04:50GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 45.99 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex