Australian bonds gain tracking firm U.S. Treasuries; investors eye May employment report

The Australian bonds gained Tuesday tracking firmness in the U.S. Treasuries and as investors wait to watch the country’s employment report for the month of May, scheduled to be released on June 15. Also, market participants are eyeing the Reserve Bank of Australia’s (RBA) Assistant Governor Debelle’s speech on the same day for further direction in the debt market.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell  1 basis point to 2.40 percent, the yield on 15-year note slumped 1-1/2 basis points to 2.78 percent while the yield on short-term 2-year traded flat at 1.62 percent by 04:40 GMT.

Australian business confidence fell substantially last month, while conditions remained at "very elevated levels". National Australia Bank's widely watched monthly business survey showed a fall in confidence from +13 to +7 index points in May. However, business confidence is still higher than the long-run average of +5.

Despite the drop in business confidence, NAB chief economist Alan Oster said, "the business sector is looking quite upbeat, maintaining the apparent disconnect with a rather melancholy household sector".

Meanwhile, the ASX 200 index jumped 1.43 percent to 5,698.50 by 05:10GMT, while at 05:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 67.17 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex