Australia’s Bonds Climbed after Fed Avoids Taper

Australia’s bonds climbed, with yields heading for the biggest decline in six weeks, after the U.S. central bank unexpectedly maintained the $85 billion pace of monthly debt purchases.

New Zealand’s dollar strengthened after the nation’s economy accelerated in the second quarter. The Aussie and kiwi currencies were near the strongest in at least three months after both Treasuries and stocks rose in New York yesterday as Federal Reserve Chairman Ben S. Bernanke said conditions in the U.S. job market are still far from what policy makers would like to see. Economists had forecast the Fed would dial down monthly Treasury purchases by $5 billion to $40 billion while maintaining buying of mortgage-backed securities at $40 billion, according to a Bloomberg News survey.

“Given that markets were widely anticipating a tapering and that hasn’t happened, and they seem to be less committed about when tapering will happen, you saw an immediate reaction in equity, bond, commodity and currency markets,” said Besa Deda, the chief economist at St. George Bank Ltd. in Sydney. “The long end of the Australian bond market will find support because it’s heavily influenced by what happens in the U.S. bond market.”


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