🚀 ProPicks AI Hits +34.9% Return!Read Now

Australian long-dated bonds rally on wage subsidy cost revision

Published 22/05/2020, 04:36 pm
© Reuters.
AUD/USD
-
NZD/USD
-
AU10YT=RR
-

By Swati Pandey

SYDNEY, May 22 (Reuters) - Long-dated Australian bond futures rallied on Friday after the Treasury halved its estimate of the cost of its wage subsidy scheme to A$70 billion ($45.77 billion) following a review.

The treasury department now estimates the number of employees covered under the "JobKeeper" programme to be about 3.5 million, from a previous forecast of 6.5 million. of reduced borrowing by the government and less pressure on its balance sheet pushed down yields on 10-year Australian government bonds AU10YT=RR to a one-week trough of 0.875% from a high of 0.925% earlier in the day.

The 10-year bond contract YTCc1 jumped 5 ticks to 99.145. Three-year bond futures YTTc1 eased 1 tick to 99.740.

The Australian dollar AUD=D3 fell 0.5% to $0.6536 after Fitch Ratings downgraded its outlook on the country's prized 'AAA' rating to "negative" from "positive", citing coronavirus-driven damage to Australia's economy and public finances. Friday's losses, the currency has gained 1.9% so far this week.

Analysts said the implications for the Aussie from the wage subsidy cost was a bit muddy.

"The (Treasury) statement paints a somewhat better outlook for the economy but also says 'overall view of the labour market is unaffected by this reporting error'," said Westpac currency strategist Sean Callow.

"So while there's no real change in the job losses, if the Australian government is providing less support as a result, that could be damaging."

The New Zealand dollar NZD=D4 was last down 0.2% at $0.6108. For the week, it has jumped nearly 3% so far after falling 3.3% last week.

New Zealand's Finance Minister said the government was discussing the concept of "helicopter money" or distributing free cash as a way of policy stimulus. (Editing by Devika Syamnath)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.