Australian bonds slump in muted trading ahead of November employment report

The Australian bonds slumped during Asian session Wednesday amid a muted trading session that witnessed data of little economic significance ahead of the country’s employment report for the month of November, scheduled to be released on December 19 by 00:30GMT for further direction into the debt market.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped 4 basis points to 1.201 percent, the yield on the long-term 30-year bond surged 4 basis points to 1.808 percent and the yield on short-term 2-year gained 3 basis points to 0.781 percent by 04:30GMT.

Global stocks extended its gain on Tuesday despite renewed concerns about hard Brexit risk. US data remained supportive of risk sentiment. US housing starts rose 3.2 percent in November to a seasonally adjusted 1.365 million beating market expectation. Meanwhile, October housing data was also revised higher, OCBC Treasury Research reported.

In addition, US industrial production also rose by stronger than expected 1.1 percent m/m after falling by 0.9 percent m/m in October. The US housing market has regained the momentum since the Fed cut its interest rate three times, the report added.

This is likely to further support the near term growth outlook. As a result of upbeat data, both Dallas Fed President Kaplan and Boston Fed President Rosengren said there is no need to cut interest rate further in the near term unless the macro outlook deteriorates.

The Australian dollar was also under pressure as the minutes of its December policy meeting showed that the central bank remained open to another rate cut as early as Feb 2020 due to concerns about weak wage growth, OCBC further noted in the report.

Meanwhile, the S&P/ASX 200 index edged tad 0.32 percent higher to 6,794.00 by 04:35GMT.