Australia Bond Yields Fall to 2013 Low Amid Global Risk AversionMasaki Kondo
Australia’s bond yields slid to the lowest this year as bird influenza in China, tension surrounding North Korea and signs of a slowing U.S. economy boosted demand for the safety of government debt.
The South Pacific nation’s currency, known as the Aussie, touched a three-week low after local data showed the construction industry shrank and job advertisements fell last month. The value of the New Zealand dollar relative to the nation’s major trading partners climbed to a record.
“I see the Aussie going lower,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp., Australia’s second-biggest lender. “Global risk aversion” is pushing Australian government yields lower, he said.
The rate on Australia’s 10-year note declined nine basis points to 3.22 percent as of 4:33 p.m. in Sydney after touching 3.18 percent, the lowest since Dec. 12.
The Australian dollar slid to $1.0348, the weakest since March 18, before trading at $1.0374, down 0.1 percent from the close on April 5. New Zealand’s currency, nicknamed the kiwi, fell 0.1 percent to 84.20 U.S. cents. The kiwi’s trade-weighted index reached 77.76, the all-time high based on the Reserve Bank of New Zealand’s data going back to 1985.
The construction performance index for Australia fell to 39 in March from 45.6 the prior month, according to a survey by the Australian Industry Group and the Housing Industry Association. A reading below 50 represents contraction.
Job advertisements in the country fell 1.5 percent in March, the first decline in three months, a report from Australia & New Zealand Banking Group Ltd. showed.
Traders see a 64 percent chance that the Reserve Bank of Australia will cut the benchmark interest rate from 3 percent by October, data compiled by Bloomberg on overnight-index swap rates show.
Government data due April 11 may show the number of people employed fell 7,500 in the country last month after a 71,500 increase the prior month, according to the median estimates of economists surveyed by Bloomberg News.
“This Thursday’s employment data are therefore almost certainly a big swing factor for the week in terms of local currency influences,” National Australia Bank analysts wrote in a research note today.
The World Health Organization said 21 cases of the deadly H7N9 virus have been confirmed in China, including six deaths. The government is confident that it can deal with the bird influenza “effectively,” Ma Xiaowei, a vice minister at the National Health and Family Planning Commission, said in an interview yesterday.
Chinese President Xi Jinping said yesterday that no country should be allowed to instigate regional chaos after North Korea’s mounting threats to attack the U.S. and South Korea included warnings of pre-emptive nuclear strikes. China and South Korea are the biggest and third-biggest export markets for Australia.
In the U.S., government figures showed on April 5 that payrolls grew 88,000 in March, the smallest gain in nine months and less than the most pessimistic forecast in a Bloomberg News poll of economists.
Australia’s dollar has strengthened 3.9 percent in the past six months in a basket of the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The New Zealand dollar has risen 5 percent.
International Monetary Fund Managing Director Christine Lagarde said yesterday that a “substantial portion” of the global economy appears better than a year ago. The Standard & Poor’s GSCI Commodity Index of 24 raw materials rose 0.4 percent today after dropping 4.1 percent last week, the most since September.
“We’re more likely to see improvement in the global economy and a gain in commodity prices from the middle of this year,” said Yuji Kameoka, the chief currency strategist at Daiwa Securities Co. in Tokyo, Japan’s second-biggest brokerage. The Aussie may rise toward $1.08 by the year-end, he said.