Australian bonds jump despite rebound in April retail sales

The Australian bonds jumped Thursday despite a rebound in the country’s retail sales for the month of April. However, the disappointment in CAPEX data in the first quarter of this year supported prices in the debt market.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.38 percent, the yield on 15-year note slumped 2 basis points to 2.76 percent while the yield on short-term 2-year hovered around 1.55 percent by 03:50 GMT.

Australia’s CAPEX rose a mild 0.3 percent q/q in Q1, slightly below market expectations of a 0.5 percent q/q increase. Importantly, spending on plant and equipment (which feeds into next week’s Q1 GDP) fell by -0.1 percent.

In contrast, the country’s retail sales bounced back in April, rising 1 percent m/m. There were some slight revisions to the previous two months, with March revised lower to -0.2 percent m/m but February revised up to be flat in the month. In annual terms, retail sales accelerated to 3.1 percent y/y in May, from 2.2 percent y/y the previous month, the strongest annual growth rate since October 2016.

Meanwhile, the ASX 200 index traded nearly flat at 5,733.50 by 04:40GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bearish at -162.57 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex