Australia bond yields hit 1-week low after Q4’18 GDP misses market estimates; January retail sales eyed

Australian government bond yields hit a one-week low during Asian trading session Wednesday after the country’s gross domestic product (GDP) for the fourth quarter of this year missed market expectations, also falling from the previous reading in the third quarter.

Investors will now be eyeing Australia’s retail sales for the month of January, along with trade balance for the similar month, scheduled to be released on March 7, by 00:30GMT respectively, which will provide further direction to the debt market.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged nearly 5-1/2 basis points to 2.104 percent, the yield on the long-term 30-year bond also slumped 51/2 basis points to trade at 2.616 percent and the yield on short-term 2-year traded 4-1/2 basis points lower at 1.692 percent by 04:00GMT.

Australia’s GDP growth slowed in Q4 to 0.2 percent q/q and 2.3 percent y/y. Looking at Q3 and Q4 together shows that annualised growth in the second half was 0.9 percent, a sharp step down from 3.8 percent in H1, with a notable softening in the household sector. Q4 growth was also held down by weak exports, farm output and mining investment, while public spending and non-mining business investment were the bright spots, ANZ Research reported.

China lowered its growth target for 2019 to 6-6.5 percent from around 6.5 percent in 2018. Despite the slower growth target, China keeps its job market target, such as 11 million urban job creation and 5.5 percent surveyed unemployment rate, unchanged, OCBC Treasury Research reported.

Meanwhile, the S&P/ASX 200 index traded 0.64 higher at 6,228.50 by 04:10GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bearish at -141.27 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex