Australian bonds rally following weak risk sentiments, ASX 200 trends lower

The Australian bonds rallied Tuesday, following weak risk sentiments that prevailed among investors, tracking U.S. debt market, as protests continue in response to President Donald Trump’s stricter travel ban policy.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, moved lower by 1-1/2 basis points to 2.72 percent, the yield on 15-year note fell 1 basis point to 3.18 percent and the yield on short-term 2-year plunged nearly 2 basis points to 1.80 percent by 04:40 GMT.

Asian stocks tumbled, after the United States President Donald Trump reigned in an aggressive immigration policy that restricts entry into the country for travellers from seven Muslim-majority nations. Large number protests hauled in response to this, after hundreds of people arriving at the U.S. airports were suspended entry from Syria, Iraq, Iran and four other countries on national security grounds.

Further, few Asian markets like China, Hong Kong and Vietnam remain closed today, on account of Lunar New Year holidays that lent lethargic trading sentiments, as well.

The Australian bonds have been closely following developments in oil markets because of their impact on inflation expectations. Crude oil prices continued to trend lower in morning session, dragged down by signs of growing output in the U.S. that could partly offset output cuts by OPEC and other producers.

The International benchmark Brent futures moved lower 0.25 percent to USD55.18 and West Texas Intermediate (WTI) fell 0.48 percent to USD52.38 by 04:50 GMT.

Lastly, investors are now looking forward to the release of trade balance data next week, besides, the Reserve Bank of Australia’s first monetary policy of 2017, scheduled to be held on February 3 for further direction in the debt market.

Meawhile, the ASX 200 index traded 0.37 percent down at 5,575.50 percent at 04:50GMT, while at 4:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 25.30 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex