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Global treasury yields soften slightly

Global treasury

But the positive sentiment is not much reflected in Asian session today

Global treasury yields softened slightly this week, helping the rebound in US and European stocks yesterday. But the positive sentiment is not much reflected in Asian session so far today. Selloff in Swiss Franc, Yen, and Euro, appears to be slowing. But they remain generally weak. Dollar is trying to extend its rebound but struggles to gain momentum against commodity currencies. Australian Dollar is steady after RBA statement.

Technically, West Texas Intermediate (WTI) crude oil appears to be losing upside momentum just ahead of 65.43 key resistance. Focus is back on 58.57 support and break should confirm the beginning of a near term correction, at least. That might drag down the Canadian Dollar as well overall risk markets. Correspondingly, in this case, the CAD/JPY might drop through 83.18 support to start a near term correction too.

In Asia, Nikkei is down 0.55%. Hong Kong HSI is down 0.66%. China Shanghai SSE is down 0.99%. Singapore Strait Times is 0.26% higher. Japan 10-year JGB yield is down 0.0189 at 0.138. Overnight, DOW added 1.95%. S&P 500 gained 2.38%. NASDAQ advanced 3.01%. 10-year yield fell 0.014 to 1.446.

In Australia, RBA left monetary policy unchanged as expected. Cash rate and 3-year yield target are held at 0.10%. Parameters of the Term Funding Facility and the government bond purchase program are kept unchanged too. The central bank also kept the pledge to “maintaining highly supportive monetary conditions until its goals are achieved”. The conditions for raising cash rate is not expected to be met “until 2024 at the earliest”.

The bond purchases were “brought forward this week to assist with the smooth functioning of the market”. A cumulative AUD 74B of government bonds has been purchased under the initial AUD 100B program. A further AUD 100B will be purchases after the current program completes. And RBA is “prepared to do more if that is necessary”.

Globally, RBA noted that longer-term bond yields increased “considerably over the past month”. That “partly reflects a lift in expected inflation over the medium term to rates that are closer to central banks’ targets”. The movement in yields have been associated with volatility in other asset prices including foreign exchange rates, Australian Dollar “remains in the upper end of the range of recent years”.

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