Australian 10-year bond yield plunges to over 3-month low amid rise in Coronavirus casualties

The Australian 10-year bond yield plunged to over 3-month low during Asian session Tuesday as investors remained risk-averse amid the increase in the number of casualties from Coronavirus as well as the number of countries reporting confirmed cases

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, plunged 13 basis points, lowest since October 2019 to 0.964 percent, the yield on the long-term 30-year bond slumped nearly 14 basis points to 1.561 percent while the yield on short-term 2-year suffered 8-1/2 basis points to trade at 0.673 percent by 04:40GMT.

Risk-off again for financial markets as China’s coronavirus continues to escalate in terms of number of infections and deaths as well as number of countries reporting confirmed cases, OCBC Treasury Research reported.

China has extended its Chinese New Year holidays to February 2. Overnight, the S&P500 slumped 1.6 percent (with the DJIA wiping out year-to-date gains) while the VIX spiked to 18.23 (highest since October 2019), and UST bonds rallied to push the 10-year yield down to 1.61 percent (also lowest since October 2019), albeit the 6-month bill auction saw tepid demand, the report added.

"With many Asian markets either still closed for the Chinese New Year festive holidays or just re-opening, the risk-off tone attributed to the coronavirus may continue to dominate today," OCBC further commented in the report.

Meanwhile, the S&P/ASX 200 index traded tad 0.22 percent higher at 6,932.50 by 04:45GMT.