Australian bonds narrowly mixed ahead of RBA's Financial Stability report

Australian government bonds traded mixed on Wednesday as investors preferred to stay on the sidelines ahead of the Reserve Bank of Australia (RBA) Financial Stability report.

The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, traded flat at 2.694 percent, the yield on the long-term 30-year Note dipped 2 basis points to 3.279 percent and the yield on short-term 2-year also surged nearly 1 basis point to 2.040 percent by 02:40 GMT.

In the United States, Treasuries saw mixed performance overnight as the downward pressure in the short-end was contrasted by little change further out the curve. From a data perspective, Treasuries were partly weighed down by stronger than expected producer prices, increasing 0.3 percent m/m on both the headline and core for March, alongside maintained gains from final wholesale inventories for February, increasing 1.0 percent m/m, setting up heightened focus on the CPI report due on Wednesday something that could go a long way in spurring the inflation debate moving forward.

Overshadowing the morning's CPI release, markets also look ahead to the release of FOMC minutes from the 20-21 March meeting, something that could highlight budding concerns related to potential fears of economic overheating largely related to what many have described as poorly timed fiscal stimulus. Markets also away Treasury budget statement and a 10-year Note auction in the early afternoon.

Meanwhile, the S&P/ASX 200 index traded 0.37 percent lower at 5,816.5 by 03:10 GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 21.84 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest