Australian bonds hop tracking strength in U.S. Treasuries post weaker-than-expected April CPI; RBA minutes in focus

The Australian government bonds hopped on the first trading day of the week, tracking strength in its United States’ counterpart, after reading a set of weaker-than-expected economic data for the month of April, released late Friday. Also, investors are closely eyeing the Reserve Bank of Australia’s (RBA) monetary policy meeting minutes, scheduled to be released on May 16 for further direction in the debt market.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, plunged 5 basis points to 2.59 percent, the yield on 15-year note slumped 5-1/2 basis points to 2.99 percent and the yield on short-term 2-year traded 2 basis points lower at 1.66 percent by 05:10 GMT.

The tussle between several categories led to a modest rise in core inflation of 0.1 percent sequentially in April, following an unexpected decline of 0.1 percent in core prices in the prior month. On a year-on-year basis, core inflation came in at 1.9 percent, the slowest rate since October 2015.

The inflation data for April gave some assurance that there are still inflationary forces in the economy. But the weakening in recent months in core inflation might be of some worry for the U.S. Fed as it considers its next rate move, noted TD Economics in a research report.

Lastly, the U.S. retail sales grew in April but came in below consensus expectations. Retail sales rose 0.4 percent sequentially in the month, as compared with the consensus expectations of 0.6 percent. Core retail sales were up 0.2 percent, as compared with consensus projection of a rise of 0.4 percent.

Meanwhile, the ASX 200 index traded 0.12 percent down at 5,810.50 by 05:10GMT, while at 05:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 0.62 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex