Australian bonds surge after RBA keeps policy unchanged, signals steady outlook for some time

Australian government bonds surged during Asian session Tuesday after the Reserve Bank of Australia (RBA) decided to remain unchanged at its policy decision, concluded early today, while maintaining a steady outlook for some time now.

Further attention will be bestowed upon the country’s gross domestic product (GDP) for the third quarter of this year, scheduled to be released on December 5 by 00:30GMT.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 8-1/2 basis points to 2.539 percent, the yield on the long-term 30-year bond also slumped nearly 8-1/2 basis points to 3.062 percent and the yield on short-term 2-year traded nearly 3 basis points down at 1.988 percent by 04:50GMT.

At the monetary policy meeting held today, the Board has decided to leave the cash rate unchanged at 1.50 percent. The global economic expansion is continuing and unemployment rates in most advanced economies are low.

There are, however, some signs of a slowdown in global trade, partly stemming from ongoing trade tensions. Growth in China has slowed a little, with the authorities easing policy while continuing to pay close attention to the risks in the financial sector.

Globally, inflation remains low, although it has increased due to the earlier lift in oil prices and faster wages growth. A further pick-up in core inflation is expected given the tight labour markets and, in the United States, the sizeable fiscal stimulus.

Meanwhile, the S&P/ASX 200 index traded 0.71 percent higher at 5,770.5 by 04:55GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bullish at 148.08 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex