Australian bonds suffer in muted trading ahead of July labour market report

Australian government bonds suffered during Asian session of the first trading day of the week Monday, amid a muted session that witnessed data of little economic significance ahead of the country’s labour market report, scheduled to be released on August 15 by 01:30GMT.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped  2-1/2 basis points to 0.971 percent, the yield on the long-term 30-year bond surged nearly 3 basis points to 1.729 percent and the yield on short-term 2-year traded tad higher at 0.729 percent by 05:40GMT.

Trade tensions continued to drive financial market moves going into the end of the week, with markets very sensitive to reports on the US-China relationship. A risk-off tone hit the markets as President Trump warned that talks scheduled for next month may not take place. Conflicting reports about whether the US would do business with telecommunications firm Huawei also added to the uncertainty, ANZ Research reported.

The US-China trade conflict continues to weigh on the commodity complex. However, a refocus on supply-side issues in the energy sector (+1.4 percent) saw the ANZ China Commodity Index end Friday up 0.8 percent. This was enough to make up for the losses earlier in the week, with heavy falls in bulks (-8 percent) and energy (-5 percent) resulting in the CCI ending the week down 2.3 percent. Precious metals beneficiated from the market turmoil, ending the week up 4 percent, the report added.

Meanwhile, the S&P/ASX 200 index remained flat at 6,501.50 by 05:45GMT.