Australian 10-year bond yield hits 1-week high after RBA cites lower risks from household debt in Financial Stability Report

Australian bonds slumped on the last trading day of the week Friday after the Reserve Bank of Australia (RBA) in its April Financial Stability Report cited that the risks from household debt have subsided.

The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 4-1/2 basis points to 2.721 percent (hits 1-week high), the yield on the long-term 30-year Note climbed 4 basis points to 3.311 percent and the yield on short-term 2-year also surged 3 basis points to 2.071 percent by 02:40 GMT.

In the United States, Treasuries pushed lower overnight during a relatively quiet session light on data of great significance. With respect to data, markets were largely limited to import prices, unchanged m/m and 3.6 percent y/y in March and jobless claims releases initial claims decreased -9K to 233K for the week ending 7 April.

However, the greater focus remained on what appears to be a forthcoming response by the Trump administration to recent chemical attacks in Syria taking to Twitter in recent days but stopping short of doing much else. All of this amounted to a move higher in the 10-year U.S. Note yield back above the 2.80 percent mark. Markets now look ahead to what stands to be a relatively quiet Friday session, highlighted by University of Michigan consumer sentiment data.

Moreover, in its financial stability report that RBA said that the global economic conditions have remained strong over the past six months, which has helped to further improve the health of the global banking system. However, a range of financial stability risks remain. Long-term government bond yields are still very low, despite generally increasing over the past year or so, which has continued to underpin elevated asset valuations and ‘search for yield’ activity.

Meanwhile, the S&P/ASX 200 index traded flat at 5,814.5 by 02:50 GMT, while at 02:50GMT, the FxWirePro's Hourly AUD Strength Index remained slightly bearish at -80.21 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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