Australian bonds nearly flat in subdued trade; investors eye unemployment rate

The Australian government bonds traded nearly flat on Wednesday, succumbing to thin trading activity during a relatively quiet session that witnessed data of little significance. Also, investors await July’s unemployment rate for labour market developments, which is scheduled to be released on Thursday at 01:30 GMT.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 1.90 percent mark and the yield on short-term 3-year note remained steady at  1.41 percent by 05:10 GMT.

The Aussie bond prices are expected to plunge as the New York Fed President William Dudley and Atlanta Fed President Dennis Lockhart that renewed a possible push to raise rates in the coming months by the Federal Reserve, both suggesting that September was very much a live meeting and that current data performance at least warrants the discussion.

The Reserve Bank of Australia in its August meeting minutes mentioned that inflation would be improved by easing, judged by prospects for growth. The minutes added that there is still room for stronger economic growth given inflation remains low for some time and the board saw diminished risks from housing debt and rising home prices.

The central bank’s meeting minutes noted that the rising Australian dollar could complicate the transition from mining boom and gross domestic product (GDP) growth likely to be more modest in second quarter, after printing strong in the first quarter of 2016.

A considerable amount of uncertainty about momentum in the labour market and inflation outlook still persistent, the RBA added in its August meeting minutes.

Meanwhile, the benchmark Australia's S&P/ASX 200 index traded 0.29 percent higher to 5,499.5 by 05:10 GMT.