Australian bonds slide post reading higher-than-expected Q1 GDP

The Australian bonds slid Wednesday after reading a higher-than-expected gross domestic product for the first quarter of this year, released earlier today.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose nearly 1 basis point to 2.39 percent, the yield on 15-year note traded flat at 2.77 percent while the yield on short-term 2-year traded 2-1/2 basis points higher at 1.62 percent by 03:40 GMT.

Australia’s GDP rose by a modest 0.3 percent q/q in Q1 to bring annual growth down to 1.7 percent, from 2.4 percent in Q4. This is the lowest rate of growth since 2009. The result was in line with market forecasts but weaker than the implied quarterly forecast published in the RBA’s May Statement on Monetary Policy.

More broadly, there looks to have been a sustained step-down in the pace of consumer spending growth as households adjust to the new world order of very low wage growth. On that front, wages growth actually picked up in the quarter, but growth in unit labour costs remains negligible, which suggests that inflation is likely to stay low.

Meanwhile, the ASX 200 index traded down 0.17 percent at 5,672.50 by 04:30GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained slightly bullish at 115.58 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex