Australian bonds slump on positive risk sentiments, employment data eyed

The Australian government bonds continue to trade lower on Wednesday on renewed risk appetite in global markets. Also, investors were optimistic over last week’s US employment report, which showed robust growth in June.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price rose 4 basis points to 1.996 percent and the yield on short-term 2-year note jumped more than 1 basis point to 1.657 percent by 05:30 GMT.

On Tuesday, the Australia’s Roy Morgan weekly business confidence surged in June, up 6.8 percent to 119.5 prior to the Federal election. The large rise in business confidence in June was likely more tied to the perception in the closing weeks of the Federal Election campaign that the Coalition would retain Government with a narrow victory, which turned out to be correct despite a week of uncertainty following the Federal Election. The increased level of Roy Morgan business confidence in June is now back above the 5-year average of 116.7.

The June US Labor Department employment situation report revealed a considerable +287k increase in non-farm payrolls, well above market expectations for a +180k increase, as compared to the revised +11k result that occurred in May (previous was +38k).

Moreover, global stocks inched higher on Tuesday as uncertainty over U.K. politics diminished with the imminent appointment of a new U.K. Prime Minister Theresa May.

Lastly, investors will remain keen to focus on the unemployment data due on July 14. Meanwhile, the benchmark Australia's S&P/ASX 200 index was trading down 0.10 percent, or 5 points, at 5,339.5 by 05:30 GMT.