The Australian government bonds were trading marginally firmer on Friday as investors pour into safe-haven assets amid losses in riskier assets including stocks and oil. The yield on the benchmark 10-year Treasury note which moves inversely to its price, fell 1bps to 2.282 pct and the yield on the 2-year Treasury bond stood unchanged at 1.593 pct by 0510 GMT.
The Australian bonds have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the Reserve Bank of Australia's target. Today, the crude oil prices fell in early trading on Friday as a stronger USD weighed and Russia warned that a global crude supply overhang could last into next year. In Canada, crude production outages from oil sand fields following forced closures due to wildfires still stood around 1 million bpd as of Wednesday, although operators said they were gradually ramping up output. The International benchmark Brent futures fell 0.52 pct to $47.82 and West Texas Intermediate (WTI) tumbled 0.86 pct to $46.30 by 0510 GMT.
Yesterday, the Melbourne Institute Survey of consumer inflationary expectations declined 0.4 pct to 3.2 pct in May. The survey is a representation of the consumer’s view of price stability over the next 12 month period. The sentiment displayed by the interviewed consumers mirrored recent data events we have seen from Australia. It was just over 2 weeks ago, that we saw a significant deviation on CPI, which came in 0.5 percentage points below expectations and 0.6 percentage points below its previous reading. Some economists have forecasted that continued pressure on inflation, and inflation related data, could see the RBA take further action.
The markets will now focus on the next weeks April unemployment rate on Thursday (0130 GMT). The benchmark Australia's S&P/ASX 200 index was down 0.70 pct, or 38 points, at 5,317.5 by 0525 GMT.
The material has been provided by InstaForex Company – www.instaforex.com