Australian bonds plunge as RBA members maintain modest optimism on economic growth, inflation

The Australian government bonds plunged Tuesday after the Reserve Bank of Australia (RBA) members remained optimistic over the economic growth of the country. Also, investors will now look forward to read the comments made by the RBA Governor Philip Lowe on February 22.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, surged 1-1/2 basis points to 2.82 percent, the yield on 15-year note rose 1 basis point to 3.25 percent and the yield on short-term 2-year also jumped 2 basis points to 1.86 percent by 04:10 GMT.

The minutes judged that steady rates remain consistent with economic growth, inflation targets and repeated that an appreciating AUD would complicate economic transition. Members expect labour costs to build gradually, while impact of competition on retail inflation to ease.

Further, the statement noted that medium-term inflation expectations are well anchored, inflation to rise gradually; members noted downward pressure on inflation could be more persistent than assumed. Board members more positive on near-term prospects for global economy; more confident that Chinese growth to stay resilient in 2017, still risks for medium term

Meanwhile, the ASX 200 index traded 0.19 percent down at 5,739.50 at 04:50GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -11.18 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex