Australian bonds plunge after reading mixed signals from the RBA’s April meeting minutes

The Australian government bonds plunged Tuesday after a long Easter holiday, following mixed signals from the Reserve Bank of Australia’s (RBA) April monetary policy meeting minutes.

Further, the Australian dollar slipped as iron ore prices extended losses and minutes of the central bank's April meeting reinforced views that interest rates would stay low for longer. The most-traded iron ore on the Dalian Commodity Exchange has fallen to its lowest since early January.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 3 basis points to 2.50 percent, the yield on the 15-year note climbed 2-1/2 basis points to 2.89 percent and the yield on short-term 2-year traded little above 1 basis point at 1.63 percent by 04:00 GMT.

The minutes from the April RBA Board meeting highlighted the improving global backdrop, the likely small impact of Cyclone Debbie, the disappointing February labor market data and increasing concerns around household debt.

Concerns around the labor market dominated although these concerns are likely to have been somewhat alleviated by last week’s labor force report which showed very strong growth in employment, driven by a massive rise in full-time jobs. That said, the stabilization of the unemployment rate at 5.9 percent would have been disappointing.

Meanwhile, the ASX 200 index traded 0.70 percent down at 5,811.50 by 04:30GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained slightly bearish at -99.42 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex