Australian bonds slip following weakness in U.S. Treasuries; FOMC decision is focus

Australian government bond futures slipped Wednesday following weakness in the U.S. Treasuries as investors booked profits ahead of the FOMC policy decision later in the day.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 3 basis points to 2.713 percent, the yield on the long-term 30-year note also jumped 3 basis points to 3.474 percent and the yield on short-term 2-year climbed 1-1/2 basis points to 1.848 percent by 03:00 GMT.

U.S. consumer confidence jumped to a near 17-year high in October, with households upbeat about the labor market and business conditions, which could underpin consumer spending and boost the economy in the final three months of the year.

FOMC began its policy meeting at the bottom of the hour. No change to the 1.00% to 1.25% policy band is expected with Wednesday's announcement 18:00 GMT. The policy statement is expected to reiterate the general outlook of moderate growth and subdued inflation, though there could be an upgrade on the economy given the swath of better than expected data, and the report of 3% growth in Q3.

However, the FOMC will also acknowledge the disruptive effects of the various natural disasters. There won't be any fresh signals for the December meeting (there is no press conference nor any updates to the quarterly projections), which will leave intact widespread expectations for a 25 bps tightening.

Meanwhile, the S&P/ASX 200 index traded flat at 5,916.5 by 03:31 GMT, while at 02:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -63.01 (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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