Australian bonds slump on firm crude oil prices; next week's unemployment data eyed

The Australian government bonds slumped Friday as crude oil prices bounced on hopes that the oil producing countries at an upcoming meeting discuss ways of stabilising the global energy market.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 6 basis points to 1.908 percent and the yield on short-term 2-year note jumped 2-1/2 basis points to 1.458 percent by 05:20 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 climbed more than 1 percent on expectations that oil exporting countries at an upcoming meeting talk about ways to prop up a market that continues to be dogged by a supply overhang. The International benchmark Brent futures rose 1 percent to $46.60 and West Texas Intermediate (WTI) jumped 1.26 percent to $44.04 by 05:20 GMT.

Moreover, the United States weekly jobless claims continue to indicate a solid labour market that drove out investors from safe-haven buying. The initial jobless claims for the week ending 6 August decreased -1k to 266k, roughly in line with expectations for a 265k result, as compared to the revised 267k reading seen in the week prior (previous was 269k). Meanwhile, the insured unemployment rate held unchanged at 1.6 percent.

Lastly, markets will remain keen to focus on the next week’s employment data. Meanwhile, the benchmark Australia's S&P/ASX 200 index traded 0.43 percent lower to 5,459.5 by 05:20 GMT.