Australian bonds slump on profit-booking; investors eye Q1 CPI next week

The Australian government bonds slumped Friday as investors cashed in profits on the last trading day of the week amid geopolitical tensions that were offset by a more positive market reaction to the sudden announcement of the United Kingdom’s snap election, to be held on June 8. 

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped over 3-1/2 basis points to 2.55 percent, the yield on 15-year note also climbed over 3-1/2 basis points to 2.96 percent and the yield on short-term 2-year traded 1-1/2 basis points higher at 1.67 percent by 03:50 GMT.

Global demand for safe-haven assets suffered as markets remain optimistic that the snap election in the UK could lead to a more favorable outcome for investors from coming Brexit negotiations. Further, the AUD was also pressured by fresh falls in iron ore, the country's single biggest export earner, as worries about a supply glut in China pulled prices to 13-week lows.

Lastly, stronger-than-expected commodity prices are expected to boost the Commonwealth Government’s revenue but there will be offsetting factors due to lower-than-expected wages growth, new policy announcements and adjustments that the Government has had to make to its current policies.

Meanwhile, the ASX 200 index traded 0.07 percent up at 5,836.50 by 04:10GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -57.21 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex