Australian bonds rally ahead of RBA monetary policy meeting amid rise in Coronavirus death tolls

The Australian bonds rallied during Asian session of the first trading day of the week Monday, ahead of the Reserve Bank of Australia’s (RBA) monetary policy meeting, scheduled to be held on February 4 by 03:30GMT amid an increase in the death tolls as well as number of affected cases from the Coronavirus.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged nearly 6 basis points to 0.915 percent, the yield on the long-term 30-year bond slumped nearly 7 basis points to 1.508 percent and the yield on short-term 2-year lost nearly 4 basis points to trade at 0.619 percent by 04:05GMT.

All eyes on the Chinese financial markets re-opening today, especially with the first reported death from the coronavirus outside China in the Philippines and China’s death toll hit at least 361, albeit China’s PBOC plans to inject CNY150 billion into the money markets, OCBC Treasury Research reported.

Wall Street declined on Friday, with the S&P500 down by 1.77 percent, whereas UST bonds rallied to push the 10-year yield down to 1.50 percent. Other risk assets like crude oil prices also declined on reports that Chinese oil demand had fallen by around 20 percent or 3 million barrels a day on the coronavirus outbreak also lent a risk-off tone, the report added.

"Asian markets are likely to brace for the return of Chinese financial markets to play catch-up to the risk-off arising from the coronavirus outbreak," OCBC further commented in the report.

Meanwhile, the S&P/ASX 200 index traded tad 0.44 percent higher at 6,866.50 by 04:10GMT.