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Australian bonds slump after September jobless rate cheers investors; lower-than-expected employment change limits losses

Australian government bonds slumped during Asian session Thursday after the country’s unemployment rate for the month of September surprisingly cheered market expectations. However, the lower-than-expected employment change limited further losses in debt prices.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped 3-1/2 basis points to 2.748 percent, the yield on the long-term 30-year bond surged 3-1/2 basis points to 3.219 percent and the yield on short-term 2-year too traded 3-1/2 basis points higher at 2.075 percent by 03:35GMT.

Another strong labour market report for September saw the unemployment rate drop to a six-year low of 5.0 percent, well below the RBA’s forecast of 5-1/2 percent for year end. Employment rose a modest 5.6k in September, vs market expectations of after the 44.0k jump in August. The strength was concentrated in full-time jobs (+20.3k), while part-time jobs fell (‑14.7k).

"We expect that the RBA will lower its unemployment forecasts in the November Statement on Monetary Policy (SoMP), although the implications for its wages and inflation forecasts are less clear-cut," ANZ Research commented in its latest report.

Meanwhile, the S&P/ASX 200 index traded 0.13 percent higher at 5,913.0 by 03:40GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bullish at 153.39 (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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