Australian bonds jump tracking strength in U.S. Treasuries post slightly dovish Fed statement

The Australian bonds jumped Thursday, tracking strength in the U.S. counterpart after the Federal Reserve delivered a slightly dovish statement in its meeting concluded late Wednesday, signalling that it is ready to announce the start of balance sheet normalization.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped nearly 3-1/2 basis points to 2.69 percent, the yield on 15-year note also plunged 3-1/2 basis points to 3.00 percent and the yield on short-term 3-year too traded 3-1/2 basis points lower at 2.03 percent by 04:00 GMT.

U.S. Treasury prices gained on Wednesday after the Federal Reserve indicated that it is likely to begin paring its balance sheet in the coming months and struck a slightly dovish tone on inflation.

In addition, the central bank also softened its description of the incoming data on inflation in paragraph one. Whereas it previously said inflation on a 12-month basis was running “somewhat below” the 2 percent target, the committee now says headline and core inflation is running “below” 2 percent.

Further, export prices in Australia skidded 5.7 percent q/q in the second quarter of 2017, the Australian Bureau of Statistics said on Thursday. That missed forecasts for a decline of 5.5 percent following the 8.8 percent gain in the previous three months. Import prices eased 0.1 percent q/q, also shy of forecasts for an increase of 0.7 percent following the 1.2 percent gain in the three months prior.

Meanwhile, The S&P/ASX 200 index rose 0.28percent to 5,736.50 by 04:10 GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bullish at 128.82 (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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