Australia 10-year bond yield hits 5-week low

Australia 10-year bond hit a 5-week low of 2.675% after consumer spending as represented by the retail sales figure unexpectedly dropped in February.

The retail sales dropped 0.1% m/m in February, compared to the expected figure of 0.3%. This follows a rise of 0.4% in January 2017 and a fall of 0.1% in December 2016.

The benchmark yield topped out at 2.988% in the first week of March. The retreat was partly due to the drop in the US 10-yr yield and partly due to markets scaling back expectations of the RBA rate hike this year.

The central bank is widely expected to keep the rates unchanged at 1.5% on Tuesday.