Australian bonds gain tracking firmness in U.S. Treasuries amid stock market rout

Australian government bonds gained across the curve during Asian session on Tuesday tracking firmness in the U.S. Treasuries amid stock market rout.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, fell 2 basis points to 2.688 percent, the yield on the long-term 30-year bond dipped 2-1/2 basis points to 3.163 percent and the yield on short-term 2-year plunged 2 basis points to 2.024 percent by 03:30GMT.

Asian equities are in the red again this morning and this should continue to provide leverage for a firmer US dollar-Asia profile intra-day. On the central bank front, expect Bank Indonesia to remain static at its policy meeting today.

“Rates markets held a steady range for the session, with a bias to higher yields and a steeper curve. The local market should maintain the recent range today. The market will be focused on the release of detailed trade data in China, with any signs of further strength likely to help support industrial commodities,” said ANZ in its morning note.

On the other hand, global risk sentiments remain mixed. Despite a firmer session in Asian equity markets yesterday, Wall Street was unable to follow through and was dragged down by financial and energy shares. It will be a quiet data day in Australia and New Zealand.

Meanwhile, the S&P/ASX 200 index traded 0.79% lower at 5,835.5 by 04:00 GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bullish at 175.29 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex