Australian 10-year bond yield hovers near 2-month high following heavy sell-off in U.S. Treasuries  

Australian government bonds slumped on Thursday following heavy sell-off in the U.S. Treasuries, pushing the U.S. 10-year Note yield above 3 percent mark for the first time in 4-1/2 years.

The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 3-1/2 basis points to 2.879 percent, the yield on the long-term 30-year Note also surged 3 basis points to 3.443 percent and the yield on short-term 2-year up over 1 basis point to 2.124 percent by 03:00 GMT.

In the United States, Treasuries continued their descent on Wednesday during a relatively quiet session light on data of great significance. Overall, focus continued to be on critical metrics, particularly in the form of fresh cycle highs being hit in the 10-year Note yield, pushing back above 3.00 percent, while the 2-year Note yield continued to hover around the 2.50 percent mark. Markets now look ahead to a greater flow of data on Thursday, highlighted by durable goods orders and jobless claims releases, followed by a 7-year Note auction later in the session.

On Tuesday, the Consumer Price Index (CPI) rose 0.4 percent in the March quarter 2018, the latest Australian Bureau of Statistics (ABS) figures reveal. This follows a rise of 0.6 percent in the December quarter 2017. That was below the market expectations of 0.5 percent growth. This lower-than-expected inflation could derail the RBA interest rate hike this year. We do expect one interest rate hike in 2019.

Meanwhile, the S&P/ASX 200 index traded 0.10 percent higher at 5,898.5 by 03:15 GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bearish at -130.14 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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