Australian bonds gain as investors cover short positions

Australian bonds gained on Friday as investors bought back bonds sold after the previous session's disappointing 10- year sale. Also, the weakness in the riskier asset supported the bonds prices to rise.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 4-1/2 basis points to 2.525 percent, the yield on the long-term 30-year note dipped 4-1/2 basis points to 3.256 percent and the yield on short-term 2-year declined 3 basis points to 1.893 percent by 02:40 GMT.

Australian shares fell back below 6K points on Friday, led mostly by banking stocks after the financial transactions watchdog increased the number of money laundering claims against Commonwealth Bank of Australia, the nation's largest lender.

In the United States, the Treasuries saw mixed performance overnight as short-end selling was contrasted by upward pressure further out the curve. With respect to data, markets received an indication of solid consumer activity in the form of considerably stronger than expected retail sales for November (INSERT). This came alongside a pullback in initial jobless claim (down -11k to 225k) and further upward pressure in import prices (increasing +0.7% m/m in November, sponsored by considerable gains in petroleum prices).

Meanwhile, the S&P/ASX 200 index traded 0.13% lower at 6,003.5 by 02:40 GMT, while at 02:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at +37.10 (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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