Australian bonds sag as investors cash in profits ahead of Trump speech

The Australian government bonds slumped Wednesday as investors cashed in profits ahead of the United States President-elect Donald Trump’s speech later in the day. Also, market participants moved away from safe-haven buying amid weakness in the U.S. Treasuries. Further, sell-off in bonds was driven by a slight recovery in energy prices.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose nearly 2 basis points to 2.75 percent, the yield on 15-year note also climbed close to 2 basis points to 3.18 percent and the yield on short-term 2-year bounced 1 basis point to 1.88 percent by 04:45 GMT.

The International benchmark Brent futures rose 0.19 percent to USD53.74 and West Texas Intermediate (WTI) gained 0.31 percent to USD50.98 by 04:50 GMT.

The Australian bonds have been closely following developments in the U.S. debt market. The benchmark 10-year bond yields splurged nearly 1 basis point to 2.38 percent ahead of the 10-year note auction and Trump’s speech scheduled for today.

On Tuesday, retail sales stumbled in November, rising just 0.2 percent m/m, the weakest result since July, following average monthly rises of 0.6 percent over the previous three months. However, in annual terms, sales were up 3.3 percent y/y. In trend terms, retail sales have risen by 0.4 percent m/m for four consecutive months.

Meanwhile, the benchmark Australia's S&P/ASX 200 index traded 0.23 percent lower at 5,727.50 by 04:50 GMT, while at 4:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bullish at 140.41 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex