Australia 10-year bond yield hits 5-week high tracking sell-off in U.S. Treasuries

Australian government bonds slumped across the curve during Asian session Tuesday after the U.S. 10-year Treasuries yield surged to a near 4-month high on expectations of the Federal Reserve policy tightening.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 2-1/2 basis points to 2.653 percent, the yield on the long-term 30-year bond traded 2-1/2 basis points higher at 3.144 percent and the yield on short-term 2-year climbed 3 basis points to 2.066 percent by 03:30GMT.

In the United States, the Treasury witnessed a heavy sell-off supported by strong economic data, such as wages. The 10-year yield surged to a 4-month high of 3.0220 percent overnight.

 “Yields on US Treasuries were mostly stable as risk appetite US 10-year yields poked above 3.00 percent, but then retreated to settle at 2.99 percent,” noted St.George Bank.

However, global risk appetite is likely to be dented by Trump’s announcement that the extra 10 percent tariffs on USD200 billion on Chinese exports will take effect on Sept. 24 and increase it to 25 percent on January 1, 2019.

On the data front, ANZ-Roy Morgan Australian Consumer Confidence bounced 1.5 percent last week, more than reversing the prior week’s 1.3 percent fall.

Moreover, the Reserve Bank of Australia in its September monetary policy meeting minutes noted that board agreed with no strong case for near-term move in interest rates and next move in rates likely to be upward if economy develops as expected.

Meanwhile, the S&P/ASX 200 index traded 0.36 percent lower at 6,152 by 03:45GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained slightly bullish at 96.27 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex