Australian bond markets welcome Reserve Bank of Australia’s (RBA) inaction during early Tuesday. In doing so, the benchmark Treasury bond coupons plummet as traders rush for risk-safety.

It’s worth noting that Australia’s benchmark 10-year Treasury bond yields dropped from 3.29% to 3.25% during the initial hour of RBA announcements. In doing so, the Aussie bond coupons fail to track their US counterparts as the US 10-year and two-year Treasury bond yields remain inactive around 3.42% and 3.98%.

That said, the RBA maintained benchmark rate near 6.0% after increasing the RBA rate in the last 10 consecutive meetings. Following the interest rate announcements, the RBA Rate Statement said, “Board expects that some further tightening of monetary policy may well be needed.”

Also read: Breaking: RBA steers rates on a steady course at 3.60% in April, as expected

Apart from the RBA linked moves, the market’s sour sentiment also weighs on the Aussie yields. Among the key catalysts, the US-China tension is a major one as Beijing keeps reiterating its dislike for the US-Taiwan ties but Washington seems to ignore it. On the same line could be the comments from Russian Foreign Minister Sergei Lavrov raised fears of escalating Moscow-Brussels tussle by saying, “The European Union (EU) has "lost" Russia.”

Looking forward, RBA Governor Philip Lowe’s comments, scheduled for early Wednesday will be crucial for the Aussie bond traders.

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