Australia 10-year Treasury bond yields extend rebound from monthly low, RBA eyed

Australian Treasury bonds remain offered, keeping the yields firmer, heading into the key Reserve Bank of Australia (RBA) Interest Rate Decision during the early Asian session on Tuesday. In addition to the pre-RBA caution, the Aussie bond coupons appear to have tracked their Western counterparts while extending the week-start rebound from a one-month low.

That said, Australia’s benchmark 10-year Treasury bond yields take the bids to refresh intraday high around 3.609%, up 1.0% on the day, while stretching Monday’s rebound from the lowest levels since June 01.

It’s worth observing that the Aussie equities and the US stock futures are also on the front foot while portraying the market’s cautious optimism at the latest. That said, Australia’s key equity gauge ASX 200 rose 1.10% while the S&P 500 Futures rose 0.60% by the press time.

The mildly positive risk profile could be linked to the US holiday and the chatters surrounding the US discussion on removing the Trump-era tariffs on China.

Elsewhere, an absence of impressive Aussie data could also be connected to the latest run-up in the Aussie bond coupons. Australia’s AiG Performance of Construction Index for June also eased to 46.2, below 50.4 prior, whereas S&P global Composite PMI and Services PMI confirmed the 52.6 initial forecasts for June.

Moving on, the RBA’s Rate Statement will be more important than the widely anticipated third rate hike, worth 50 basis points (bps), as fears of economic slowdown and fresh covid woes from China’s Anhui province challenge the hawks.

Also read: Reserve Bank of Australia Preview: Will a 50 bps rate hike rescue AUD bulls?