Australian bond yields drop on weak trade data and ECB

Dismal trade data and expectations that ECB would provide more stimulus pushed Australian government bonds higher.

The yields dropped across the board, with the 10-year falling six basis points to 2.744%. The 2-yr yield, which is more sensitive to the short-term rate hike/inflation expectations, dropped 2.4 basis points to 1.809%.

The data released earlier today showed Australia’s trade deficit blew out unexpectedly in October. A deficit of AUD 1.541 billion was recorded, which was larger than the upwardly-revised AUD 1.272 billion figure of September.

Meanwhile, expectations that the ECB would extend the maturity of its bond buying program also supported bond prices.