Australian bonds gain as investors cover previous short positions

Australian government bonds gained on the last trading day of 2017 as investors cover previous short positions. Also, the stock market opened lower on Friday amid muted trading that marked the last week of the year following the highs of the past few months.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1-1/2 basis point to 2.663 percent, the yield on the long-term 30-year note dipped 2 basis points to 3.373 percent and the yield on short-term 2-year slid 4 basis points to 1.987 percent by 03:10 GMT.

The premium offered by Australian two-year bonds over their US counterpart is already down to almost nothing and set to turn negative for the first time since 2000.

In the United States, Treasuries saw downward pressure across the curve during a relatively quiet Thursday session light on economic data of great significance. With respect to data, markets were greeted by little change in the way of weekly jobless claims, holding steady around 245k, coupled with a wider goods trade balance for November, increasing to -$69.7 billion and a rebound in wholesale inventories up +0.7 percent m/m in November, from -0.4 percent m/m, followed later by solid upward pressure seen from the Chicago PMI measure for December, increasing to 67.6, highest reading since March 2011.

Markets now await what stands to be another relatively quiet session to end 2017 on Friday with little scheduled in the way of economic data.

Meanwhile, the S&P/ASX 200 index traded 0.26 percent lower at 6,024.5 by 03:10 GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained slightly bullish at 76.017 (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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