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Australian bonds plunge ahead of RBA meeting minutes, RBA Governor Lowe’s speech
Australian government bonds plunged during early Asian session of the first trading day of the week Monday as investors wait to watch the Reserve Bank of Australia’s (RBA) June monetary policy meeting minutes, scheduled to be released on June 18 by 01:30GMT and Governor Philip Lowe’s speech, due on the following day by 01:15GMT for further direction in the debt market.
The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped 2 basis points to 1.402 percent, the yield on the long-term 30-year bond edged nearly 1-1/2 basis points higher to 2.030 percent and the yield on short-term 2-year surged 3 basis points to 1.038 percent by 04:30GMT.
Risk sentiment consolidated last Friday as markets await more directions from central bank meetings this week, including the Fed, Bank of Japan and Bank of England. On trade talks, US Commerce Secretary Ross said on Sunday that “the most that will come out of the G20 might be an agreement to actively resume talks”, OCBC Treasury Research reported.
It seems that the market sentiment may depend on whether there will be a meeting between President Trump and President Xi, which is not confirmed yet as of now.
For this week, markets will watch out for the USTR hearing on the new tariff to tax the remaining US$300 billion of Chinese goods. The hearing will end on June 25, just ahead of the G20 meeting, the report added.
The deceleration of year-on-year readings was mainly due to falling gasoline prices and food prices. Core PPI increased by 0.2 percent m/m and 2.3 percent y/y, supported by rising service costs. This may support the rebound of the PCE. Markets will closely watch for the US CPI data due today, the report added.
Meanwhile, the S&P/ASX 200 index remained -1.08 percent lower at 6,484.0 by 04:35GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained slightly bearish at -87.34 (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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