Australian 10-year bond yields slump tracking strength in U.S. Treasuries; April employment report in focus

The Australian government 10-year bond yields slumped Wednesday, tracking strength in U.S. Treasuries. Also, investors now remained focused on the country’s employment report for the month of April, scheduled to be released on May 18 for detailed direction in the debt market. 

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped nearly 5 basis points to 2.54 percent, the yield on 15-year note remained flat at 2.99 percent and the yield on short-term 2-year also remained steady at 1.66 percent by 05:10 GMT.

The minutes of the May board meeting, released yesterday, presented a similar cautiously optimistic tone that has underpinned commentary in recent weeks. However, it was noteworthy that the RBA continues to highlight the labour market and housing as the key sources of concern.

In contrast, the wage price index, excluding bonuses (WPI), rose by 0.5 percent q/q in Q1 and is up 1.9 percent over the year to March. The data were in line with market expectations. That said, the Q4 reading was revised lower to 0.4 percent q/q.

For the RBA, today’s numbers are broadly in line with its view that wage growth has stabilised. However, wage growth (and in turn underlying inflation) is expected to remain subdued for some time, so the data are likely to have few implications for near-term monetary policy.

Meanwhile, the ASX 200 index traded 1.04 percent down at 5,793.50 by 04:40GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -38.30 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex