Australian 10-year bond yield hits 1-1/2 month high following weakness in U.S. Treasuries

Australian 10-year government bond yield surged to a 1-1/2 month high during Asian session Wednesday following heavy sell-off in the United States counterpart. The U.S. 10-year Treasury yield crossed the 3 percent mark, tracking tit-for-tat trade tariff scenario with China amid hopes of an interest rate hike by the Federal Reserve this month.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped nearly 5 basis points to 2.715 percent, the yield on the long-term 30-year bond also surged 5 basis points to 3.210 percent and the yield on short-term 2-year too climbed 5 basis points to 2.125 percent by 03:30GMT.

After the US imposed tariffs on USD200 billion worth of Chinese imports yesterday, China retaliated with 5-10 percent tariffs on USD60 billion worth of imports. US equities were resilient, perhaps due to the staggered implementation of tariffs by the US. Dow Jones was up 0.7 percent and S&P 500 up 0.5 percent. Treasury yields rose with the 2 year up 2.5bps and 10 year up 6bps. Global yields were biased higher, ANZ Research reported in its latest Australian Morning Focus.

According to a report from CNBC, "Treasury selling is often viewed as a way Beijing could retaliate against the Washington, but bond strategists are skeptical China is really trying to send a message".

Meanwhile, the S&P/ASX 200 index traded 0.36 percent lower at 6,152 by 03:35GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bullish at 170.72 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex