Australian bonds plunge as recent poll supports Bremain

The Australian government bonds plunged Tuesday as the latest polls by various corporate bodies in the United Kingdom on the June 23 Brexit referendum have reversed, with the percentage of citizens in favour of staying in the European Union outnumbering those who opposed it.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price rose 2-1/2 basis points to 2.170 percent and the yield on short-term 2-year note jumped 3-1/2 basis points to 1.681 percent by 05:20 GMT.

The recent polls in the United Kingdom in run up to the June 23 Brexit referendum indicate that the percentage of citizens in favour of "Remain" the European Union (EU) has outnumbered those who want to "Leave", easing the possibility that Britain might leave the EU after 43 years of membership in the bloc.

According to the NatCen poll results on the United Kingdom referendum campaign, 53 percent would vote to 'Remain' in the European Union, while, 47 percent would vote to 'Leave'. Similarly, the ORB/Daily Telegraph poll results on the United Kingdom referendum campaign, 53 percent would vote to 'Remain' in the European Union, while, 46 percent would vote to 'Leave'.

Moreover, the Reserve Bank of Australia in its June monetary policy board meeting minutes mentioned that appreciation of AUD could complicate adjustment of economy to the lower terms of trade and low interest rates and weaker AUD since 2013 have helped support above potential growth in Q1.

The board's decision to leave rates steady at June 7 meeting was consistent with sustainable growth and they added that Q2 growth to be more moderate, but year-ended growth should stay slightly above potential.

The meeting also noted the recent uncertainty about UK referendum on EU membership that has resulted in increased sterling volatility and growth in Australia's major trading partners moderated in Q1, as largely expected.

Markets now look ahead to the first leg of Fed Chair Yellen’s semiannual monetary policy testimony before Congress on Tuesday (before the Senate Banking Committee).

Meanwhile, the benchmark Australia's S&P/ASX 200 index was trading higher 0.06 percent, or 3 points, at 5,221.5 by 05:20 GMT.