The Australian bonds traded mixed on Thursday after key employment report. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, moved down 0.55 pct to 2.530 pct and the yield on the 2-year Treasury bond rose 1.22 pct to 1.996 pct by 0535 GMT.
The Australian March unemployment rate fell to 5.7 pct, lower than the market anticipation of 5.9 pct, as compared to 5.8 pct in February. Similarly, employment change rose to 26.1k (consensus was for 17k), prior -0.7k revised from +0.3k.
Australia’s jobless rate unexpectedly fell to the lowest level in 2-1/2 years in March, reflecting a lift in business confidence and signalling the central bank is unlikely to ease policy in the near-term.
"The better than expected result removes a key support for our outlook for the RBA to deliver a rate cut in May. The upcoming 1Q16 CPI data (27April) and trends in the AUD could still tip the RBA into a May easing, but we think the balance of risks has now shifted to a later, August cut" said Macquarie Bank economist James McIntyre.
Also, the Australian bonds have been closely following developments in oil markets because of their impact on inflation expectations. The Brent crude oil, a global benchmark, was lifted on hopes that key oil producers could agree on a production freeze this Sunday. The International Brent futures fell 1.43 pct at $ 43.53 and West Texas Intermediate (WTI) dipped 1.01 pct to $ 41.34.
A further obstacle has been a bounce back in the Aussie, which gained more than 7 pct in March to be the best performer in a gathering of 10 major currencies this month. Meanwhile, RBA Governor Glenn Stevens also warned in his April statement that an appreciating AUD could entangle the adjustment under way in the economy.
