RBA Wins Room to Hold as Tighter Budget Seen

Australian bonds are generating the strongest demand in three years on speculation the central bank will be able to extend a period of record-low interest rates as Treasurer Joe Hockey’s first budget targets deficit reduction.

Investors bid for an average 4.14 times the amount of sovereign debt auctioned from January to April, the strongest start to a year since 2011, data from the Australian Office of Financial Management show. A sale of June 2016 notes on April 4 had a so-called bid-to-cover ratio of 5.79, a level unseen since November 2012. Government bonds have gained 2.7 percent in 2014, set for their best annual performance in three years.