Australian bonds sag as investors sentiments revive after probability of Dec Fed rate hike jumps to 80 pct

The Australian government bonds slumped Thursday as investors’ risk sentiments revived after the implied probability of the United States Federal Reserve December interest rate hike jumped to 80 percent.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose nearly 9 basis points to 2.505 percent (intraday), the yield on 15-year note jumped 10 basis points to 2.917 percent and the yield on short-term 2-year climbed 8 basis points to 1.679 percent.

On Wednesday, the United States Republican candidate Donald Trump pinned his victory against Democrat opponent Hillary Clinton in the 2016 presidential election. Investors again revised the outlook for US interest rates after Trump's victory, with the probability of a December rate hike by the Federal Reserve going from as low as 30 percent to as high as 80 percent.

Moreover, 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. Crude oil prices recovered from previous losses as the U.S. financial markets bounced back from an early Brexit-like slide that followed Donald Trump’s surprise victory in the US presidential election. The International benchmark Brent futures rose 0.71 percent to $46.69 and West Texas Intermediate (WTI) also climbed 0.15 percent to $45.34 at 06:20 GMT.

Meanwhile, the benchmark Australia's S&P/ASX 200 index traded 0.66 percent higher to 5,339 by 06:20 GMT.