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Australian 10-year bond yields drop to 16-week low amid broad risk-off

  • Australian bond yields bear the burden of coronavirus outbreak fears.
  • The latest Aussie data have been mixed.
  • Eyes on the Chinese market’s reopening after Lunar New Year Holidays, Caixin Manufacturing PMI.

The Australian government bonds are no different from the global risk barometers as they decline amid fears of China’s coronavirus outbreak. The 10-year Aussie treasury bond yields drop to the lowest since October 10, 2019, to 0.881 before bouncing off to 0.905 by the press time of Monday’s Asian session.

Read: Coronavirus Update: 9 cases in US, Hubei province reports 56 new coronavirus deaths

The coronavirus epidemic has so far claimed more than 300 lives and affected nearly 15,000 people across the globe. While Chinese diplomats had to waste their Lunar New Year holidays while countering the lethal disease, global economies have shut their doors on the dragon nation’s face while cutting airlines to and from Beijing. The American Airlines Group said to have banned flights till March 27 while also restricting foreign nationals who have visited China in the last 14-days.

Read: AUD/USD: Under pressure near 0.6690, multi-week low, with eyes on China open

Elsewhere, the World Health Organization (WHO) has also termed coronavirus as an international health emergency while also not entertaining the macro aspect of curing travel/trade.

In addition to the Australia yields, the US 10-year treasury yields also stay weak around 1.52% by the press time.

The recent Aussie data for January have been mixed as AiG Performance Of Mfg Index dropped to the lowest since July 2015 while Commonwealth Bank Manufacturing PMI crossed 49.1 expected and prior to 49.6. Further, December month Building Permits also troubled traders as the former recovered from -3.0% forecast to -0.2%, 11.8% prior, on a monthly basis.

Moving on, market players will closely observe China’s Caixin Manufacturing PMI, expected 51.3 versus 51.5 prior, while also keeping eyes on how traders in Beijing react after a long break and following the disease outbreak. It’s worth mentioning that the Chinese diplomats have already identified the need to cap the short-selling via various measures.

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