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Australian bonds mixed ahead of August employment report amid geopolitical tensions in the Middle East

The Australian government bonds remained mixed during Asian trading session Wednesday ahead of the country’s employment report for the month of August, scheduled to be released on September 19 amid ongoing geopolitical tensions in the Middle East and upcoming Fed’s monetary policy meeting later today.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, hovered around 1.136 percent, the yield on the long-term 30-year bond edged barely 1 basis point higher to 1.723 percent and the yield on short-term 2-year slipped 1 basis point to 0.871 percent by 04:20GMT.

Global risk appetite should be supportive going into the FOMC policy decision tonight. The New York Fed has injected liquidity to calm the repo market, while Saudi Arabia has partially restarted production at the damaged Abqaiq oil plant and assured that capacity will normalise by the end of the month, OCBC Daily Treasury Outlook reported.

The S&P500 index edged higher, while UST bonds also gained in anticipation of the Fed’s 25bp rate cut tonight, which saw the 10-year yield close at 1.80 percent, the report added.

"Asian markets may open a tad firmer this morning but remains likely to tread water ahead of the deluge of central bank meetings including FOMC tonight, followed by CBC, BOE, BOJ and BI tomorrow," OCBC further commented in the report.

Meanwhile, the S&P/ASX 200 index edged tad -0.33 percent to 6,665.50 by 04:25GMT.

By Debarati Bir
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