Australian bonds rebound as crude snap 7-day straight gains; Yellen's speech in focus

The Australian government bonds gained Tuesday as crude oil futures snapped seven-session winning streak on expectations of higher output and a strengthening dollar. Also, investors remained cautious ahead of the United States Fed Chair Yellen’s press conference, in an attempt to estimate the Fed's most likely step.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 5-1/2 basis points to 1.907 percent and the yield on short-term 2-year also dipped nearly 4 basis points to 1.428 percent by 05:00 GMT.

The Australian bonds have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the Reserve Bank of Australia's target.

The crude oil prices declined more than 3 percent as Iraq prepared to increase its exports and renewed concerns that upcoming producer talks will not rein in oversupply. Also, worries about expanding Chinese fuel exports dragged oil prices. The International benchmark Brent futures fell 1 percent to $48.67 and West Texas Intermediate (WTI) dipped 1.27 percent to $46.81 by 05:00 GMT.

Lastly, markets are likely to maintain recent ranges in the lead up to Fed Chair Yellen’s Jackson Hole speech on Friday.

Meanwhile, the benchmark Australia's S&P/ASX 200 index traded 0.60 percent higher to 5,528.5 by 05:00 GMT.