Australian bonds rally as Britain votes for Brexit

The Australian government bonds rallied on Friday as Britain has voted to leave the European Union in a referendum after 43 years of membership in the bloc. Also, investors are pricing for RBA July rate cut above 50 percent after Brexit vote.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price fell more than 21 basis points to 2.041 percent and the yield on short-term 2-year note jumped nearly 19 basis point to 1.558 percent by 05:20 GMT.

Brexit vote-remain on 14.584 million votes, leave on 15.705 million after more than 90 percent of votes counted and the 'Leave' side has now won enough votes to guarantee victory in the Brexit poll.

Interestingly, Farage declared victory in a speech held in London as a Brexit looked increasingly likely.

"The dawn is breaking on an independent United Kingdom," he said to loud cheers at a Leave campaign party.

In addition, the Australian bonds have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the Reserve Bank of Australia's target. Today, crude oil prices dropped more than 6 percent as 'Leave' Camp Leads in 'Brexit' Vote. Meanwhile, the International benchmark Brent futures fell 6.40 percent to $47.63 and West Texas Intermediate (WTI) climbed 6.31 percent to $46.95 by 05:20 GMT.

Meanwhile, the benchmark Australia's S&P/ASX 200 index was trading lower 4.83 percent, or 256.5 points, at 5,039.5 by 05:20 GMT.