Australian bonds witness sharp rally on growing global uncertainties amid muted trading session

The Australian bonds witnessed a sharp rally Thursday, owing to ongoing global uncertainties amid a muted trading session that witnessed data of little economic significance.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 1-1/2 basis points to 2.39 percent, the yield on 15-year note plunged 2 basis points to 2.74 percent and the yield on short-term 2-year traded 1 basis point lower at 1.68 percent by 04:10 GMT.

In the latest RBA June meeting minutes, released earlier today, International economic conditions were noted to be improving although headline inflation had eased and core inflation remained low. The central bank pre-empted the weak Q1 Australian GDP numbers, which were released the day after the meeting, but noted that it would not read more into them as they reflected "quarter-to-quarter variation in the growth figures".

The minutes said the “magnitude of the major bank levy was not particularly large compared with typical market movements in bank funding costs.” The Standard & Poor's rating downgrade for a number of the smaller Australian financial institutions would lead to "some effect" but "these institutions accessed less wholesale funding than the major banks".

Meanwhile, the ASX 200 index rose 0.76 percent to 5,663.50 by 05:10GMT, while at 05:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -40.50 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex