Australian Bonds Flat in Quiet Trade
The Australian bonds traded nearly flat on Tuesday, succumbing to thin trading activity during a relatively quiet session that saw little data of much significance. The yield on the benchmark 10-year Treasury note which moves inversely to its price hovered at 2.30 percent and the yield on the short-term 2-year bonds also remained unchanged at 1.66 percent by 0415 GMT.
The Reserve Bank of Australia (RBA) Governor Glenn Stevens said that they are very committed to inflation-targeting monetary policy framework and suspect there are quite some years of fiscal repair work for the government in the period ahead. He further added it is true that inflation is very low; technically it is below our announced target, medium term inflation targeting is not rigid and does not demand knee-jerk reaction from their part. Our forecasts not very different from Treasury's and do not agree that RBA need a different inflation target, he added.
"Fed speakers reiterated that June is live and that the data is not far away from where the (Federal Open Market Committee) needs to see it in order to proceed with interest rate normalisation," the ANZ economists said in a note.
Moreover, future course in bond prices are likely to be ruled by the movements in the crude oil market. The International benchmark Brent futures fell 0.48 pct to $48.12 and West Texas Intermediate (WTI) dipped 0.31 pct to $47.93 by 0415 GMT. The benchmark Australia's S&P/ASX 200 index was trading down 0.03 pct, or 1.5 points, at 5,329.5 by 0415 GMT.