Australian Government Bonds Surge Ahead

The Government bonds of Australia increased, thereby sending the 10-year yields to its lowest level in the last 5 months. The stocks, on the other hand, declined as well, over concerns that the global economy is slowing down. Australian Dollar, also known as Aussie also stayed on the lower side as data forecast showed the manufacturing industry contracted in Germany and in China, it expanded, but at a weaker pace. Kiwi, the major currency of New Zealand declined for the 3rd straight day against Yen after the biggest dairy provider in the world, Fonterra Cooperative Group Ltd., stated that the whole milk power prices experienced a fall for the 1st time in the current year. 

According to the foreign Exchange Strategist of Australia & New Zealand Banking Group Ltd., Andrew Salter, the bond market is currently reacting to the weak headline global growth numbers and the outlook for Reserve Bank of Australia policy in the near term basis. Salter added that Germany has weakened more than what was anticipated by the market. Salter commented further that the weakness is sort of confirmed at this point of time and hence, he feels that the risk should be taken off the table.

The 10-year bond yield of Australia experienced a decline of 8 basis points and it is currently at 3.02%. This is the lowest level of the same since 16th November. The 3-year rate, on the other hand, touched 2.53%, which marks its lowest figure since 19th November.

The Aussie had touched $1.0250, but later it declined by 0.2% and it is currently priced at $1.0256. On yesterday, the currency experienced a decline of 0.9%. Against Yen, the currency has experienced a tumble of 0.2% and is currently priced at 99.86 Yen. Kiwi, on the other hand, is currently valued at 84.91 US Cents from yesterday’s value of 84.99 US Cents. Kiwi declined by 0.8% on yesterday. The currency, after going down by 1.2% in the previous 2 sessions, has slid down by 0.1% and is now priced at 82.69 Yen.

The MSCI World Index of Stocks went down by 0.7%. On the other hand, the Thomson Reuters and Jefferies CRB Index of the raw materials experience a decline of 1.7%. According to a survey, the factory index in Germany stayed at 47.9 for April, which is below the 50 level and this denotes contraction.