Australian bonds gain on weak risk appetite

The Australian government bonds gained on Monday as risk sentiment softens among investors after Petroleum Exporting Countries (OPEC) and Russia failed to strike a deal in Doha to freeze crude output. Investor’s sentiment also weakens on weak March United States Industrial production. The yield on the benchmark 10-year bonds, which moves inversely to its price, moved down 3.26 pct to 2.494 pct and the yield on the 3-year bond dipped 2.94 pct to 1.945 pct by 0450 GMT.

The negotiations failed to reach an agreement in the Doha round of talks on Sunday to strike a deal on oil output freeze. On the other hand, Saudi Arabia said that they were ready to freeze the current level of crude oil production on condition that all other producing countries follow the same. The International benchmark Brent futures fell 4.06 pct to $41.35 and West Texas Intermediate (WTI) tumbled 4.63 pct to $38.49 by 0515 GMT.

On Friday, the United States industrial production plunged 0.6 pct m/m in March, against market expectation of 0.1 pct m/m fall, from down 0.5 pct in February. Moreover, manufacturing output declined 0.3 pct m/m (consensus was for 0.1 pct m/m), from prior 0.1% (revised to -0.1 pct).

“Investors had flocked to safe assets like bonds following the release of softer-than-expected data on the US economy at the end last week”, said ANZ economists in its report.

"Yields in major markets fell on Friday after the softer US data. Australian markets followed the moves”, they added.

Meanwhile, the S&P/ASX 200 index fell 0.31 pct or 16 points to 5,122.5 by 0516 GMT.