Australian bonds sharply rebound despite upbeat July employment report

The Australian bonds sharply rebounded Thursday as investors have largely shrugged-off the upbeat reading of the country’s employment report for the month of July, with the jobless rate matching expectations, albeit lower than the previous reading in June.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped nearly 2-1/2 basis points to 2.65 percent, the yield on 15-year note also plunged 2-1/2 basis points to 2.95 percent and the yield on short-term 2-year traded nearly 1 basis point lower at 1.83 percent by 03:40 GMT.

Australia’s Employment rose 27.9k in July, building on the strength of the past few months. The unemployment rate printed at 5.6 percent, down a tick from an upwardly revised 5.7 percent in June. The strength was narrowly based geographically, with Queensland (+27k) accounting for nearly all the jobs growth. NSW employment rose very modestly (+0.5k) while employment in Victoria (-2.2k), Western Australia (-1.3k) and Tasmania (-2.2k) fell.

While the recent improvement in the labour market is an encouraging sign for the RBA, and business surveys suggest some near term downside risk to the unemployment rate, further material inroads into the unemployment rate look likely to be more difficult to achieve over the next year or so, particularly if housing construction slows, ANZ Research reported.

Meanwhile, the S&P/ASX 200 index traded 0.28 percent lower at 5,746.50 by 03:40 GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 59.32 (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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