Australian government bonds jumped Tuesday tracking a solid development in the U.S. counterpart after hawkish bets cropped up among market participants over the plausible appointment of next Federal Reserve Chair after serving Chair Janet Yellen’s term expires in early February 2018.
The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 3 basis points to 2.77 percent, the yield on the long-term 30-year note plunged nearly 3-1/2 basis points to 3.54 percent and the yield on short-term 2-year traded nearly 2-1/2 basis points lower at 1.92 percent by 01:55GMT.
On Monday, the U.S. yield curve, as depicted by the gap between two-year and 10-year Treasury yields, stood at 80 basis points. The curve is slightly steeper than the 78 basis points reached earlier this month, its flattest in over 13 months.
U.S. President Donald Trump is expected to announce his nominee for Fed chair before he leaves for his Asia trip beginning on Nov. 3. Trump has said he is considering Fed Governor Jerome Powell, Stanford University economist John Taylor, as well as Yellen herself, whose term expires in early February. The President has also interviewed former Fed Governor Kevin Warsh and his economic adviser Gary Cohn for the top Fed post.
Lastly, while Trump has expressed his preference for low-interest rates, Bloomberg reported a week ago that Taylor impressed Trump in his interviews, raising Taylor’s perceived chances.
Meanwhile, the S&P/ASX 200 index rose 0.29 percent to 5,884.50 by 02:30 GMT, while at 02:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -6.01 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex
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