The Australian long-term bonds slumped on Tuesday, tracking U.S trend after dovish comments from the US Federal Reserve and strong business confidence report. The yield on the benchmark 10-year Treasury note which moves inversely to its price, moved higher 2.32 pct to 2.474 pct and the yield on the 3-year Treasury bond ticked up 2.78 pct to 1.886 pct by 0555 GMT.
The Dallas Fed President Kaplan retreated that the Fed should remain cautious and patient when deciding to raise rates, noting the need to potentially reverse course of thy opted to move too fast. In terms of concerns abroad, Kaplan said that he see it as clear that Chinese growth is slowing (and is likely to continue slowing), noting that he expects this will weigh on the United States.
“US Treasuries were broadly unchanged after Fed official Kaplan raised concerns about global risks, and favoured a gradual approach to rate rises and markets continue to see no chance of a Fed hike in April, and less than 45 per cent chance of a hike by December”, said St George economists.
Moreover, Australia March business confidence rose to 6, from 3 in February; while business conditions rose to 12 from 8 in February. The business sector reported an improved outlook in March, with both conditions and confidence up strongly. The business sector outlook looks much more robust now, with the uncertainty of early 2016 fading and suggesting that the economy remains in solid shape.
“Bonds kept to a tight range overnight with a quiet opening expected on Tuesday and rates markets took a back seat as the focus was on equities after the strong showing in Asian markets in the local session”, said ANZ economist.
Meanwhile, the investors will primarily focus on the upcoming unemployment figure on Thursday.
The material has been provided by InstaForex Company – www.instaforex.com