- Australia government bonds picked up a bid, driving yields lower after ABS reported a sharp slowdown in the economy in the September quarter.
- Aussie 10-year government bond yield fell to 2.48 percent – the lowest level since November 2017
The Aussie 10-year government bond yield fell four basis points to a four-month low of 2.5 percent after the Australian Bureau of Statistics reported the third quarter GDP at 0.3 percent or 2.8 percent over the year.
That is a significant step down from the 3.4 percent growth rate recorded in the September quarter.
The GDP has printed well below the consensus estimate of 3.3 percent, largely due to weaker than expected construction and capital expenditure figure and a slowdown in the housing sector.
The sharp slowdown could force the Reserve Bank of Australia (RBA) to hold rates at record lows for some time. Markets were never expecting the central bank to hike rates in 2019 and now may begin pricing in a delay to the second half of 2020.
As a result, the government bond yields could drop further in the near future.
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