Australian bonds nearly flat in thin trading; UK PM May’s speech to dominate markets

Australian bonds traded nearly flat Tuesday in thin trading activity during a relatively quiet session that witnessed data of little significance. Also, markets await the United Kingdom’s Prime Minister Theresa May's Brexit speech.

The 10-yield on the benchmark 10-year Treasury note, which moves inversely to its price, hovered around 2.70 percent, the yield on 15-year note remained steady at 3.14 percent and the yield on short-term 2-year stood flat at 1.86 percent by 05:00 GMT.

Further, UK PM Theresa May's Brexit speech is scheduled to be held on Tuesday by 11:45 GMT. We expect that she will lay out plan to exit the European Union that would see Britain losing access to the bloc's single market. Additionally, investors will also be awaiting the Australian labour market data, scheduled for release Thursday for further direction in the debt market.

In terms of recent economic data, the Australia’s Melbourne Institute (MI) consumer inflation gauge climbed 0.5 percent in December (rose for the fifth straight month) and was up 1.8 percent from a year ago. That was the biggest gain in six months. In November, the inflation index nudged up 0.1 percent, which translated into a year-over-year gain of 1.5 percent.

Meanwhile, the benchmark Australia's S&P/ASX 200 index traded 0.67 percent lower at 5,653.5 by 05:10 GMT, while at 5:00 GMT, the FxWirePro's Hourly AUD Strength Index remained slightly bullish for third straight working day at 99.65 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex