Yields in narrow range on commodity sales

Canadian bills – Canadian government bonds spent a second day above U.S. treasuries although the yield spread narrowed to just three basis points. Implied three-month yields rose by a single basis point according to bills of acceptance futures in Montreal. A trade report was unlikely to budge economic expectations in the morning session and bill futures took their cue from Eurodollars nursing minor losses.

Australian bills – The Australian dollar was higher overnight and stocks across the region rose as the recent commodity price rebound helped spur further interest in riskier bets. Dealers ignored the net-tightening announced the day before in the annual budget, which had sparked a decent rally for short-end bill futures. On Wednesday those futures price gains were unwound with implied yields gaining two or three basis points. The closing yield on the Aussie 10-year government bond was 5.43% where sellers forced yields three pips higher on the return of risk appetite.

Japanese bonds –Japanese 10-year bond futures expiring in June settled one tick lower at 140.65 although cash yields were pushed lower by one basis point to 1.112% following a decline in Japan’s leading indicator. The index fell from 104 to 99.5 using latest March data, which includes machine tool orders and business inventories. Bonds continue to offer solace to domestic investors as the challenge of rebuilding the economy looms large.

Andrew Wilkinson is a Senior Market Analyst at Interactive Brokers LLC

Note: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Interactive Brokers LLC nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither IB nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results.

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About the Author
Andrew Wilkinson

Andrew is a seasoned trader and commentator of global financial markets. He worked for several London-based banks trading cash and derivatives before moving to the U.S. to attend graduate school. Andrew re-joins Interactive Brokers following a two-year stretch at a major Wall Street broker-dealer as their Chief Economic Strategist. His coverage of stocks, options, futures, forex and bonds regularly surfaces in global media, and over the last several years Andrew has made many TV appearances on Bloomberg, BBC, CNBC and BNN and Yahoo Finance.

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