Australian bonds rally tracking strong global debt market; investors await next week’s RBA policy meeting

The Australian government bonds rallied on the last trading day of the week, tracking firmness in the global debt market. Also, investors are eyeing the Reserve Bank of Australia’s (RBA) monetary policy meeting, scheduled to be held on May 2 for further direction in the debt market.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, plunged 3-1/2 basis points to 2.58 percent, the yield on 15-year note also slumped 3-1/2 basis points to 2.98 percent and the yield on short-term 2-year traded 2-1/2 basis points lower at 1.66 percent by 04:20 GMT.

The tax plan outline released on Wednesday by US President Donald Trump would sharply slash business taxes and discount the rate on overseas corporate profits brought back into the United States. The proposed changes include a cut to the top tax rate on pass-through businesses to 15 percent from the current rate of up to 36.9 percent.

Australia’s headline inflation, released on Wednesday, rose 0.5 percent quarter-on-quarter in the first three months of 2017, according to the Australian Bureau of Statistics, matching the December quarter figure and a tad below expectations for a 0.6 percent gain. However, it rose to 2.1 percent, up from 1.5 percent in the December quarter and versus forecasts for a 2.2 percent rise, lifting the headline inflation up into the Reserve Bank of Australia’s (RBA) 2-3 percent target range for the first time since the September quarter of 2014.

Meanwhile, the ASX 200 index traded 0.07 percent down at 5,902.50 by 05:20GMT, while at 05:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bearish at -110.09 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex