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Australian government bonds plunged across the curve during Asian session on Thursday tracking a heavy sell-off in the U.S. Treasuries, where 10-year UST yield hits a 7-year high of 3.200 percent. Also, a rise in Aussie bonds yield was supported by a widened trade surplus.
The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 5 basis points to 2.698 percent, the yield on the long-term 30-year bond traded 4-1/2 basis points higher at 3.188 percent and the yield on short-term 2-year surged 1-1/2 basis points to 2.001 percent by 03:40GMT.
“The U.S. economic data was resoundingly strong and budget worries in Italy eased on the coalition’s plans to rein in fiscal deficits over time. Treasury yields rose, hitting levels last seen in 2011, with a solid ADP report and a booming ISM non-manufacturing driving the move. The US 2-year yields climbed 5bps to 2.86 percent with the 10-year up 10bps to 3.18 percent. Global yields followed treasuries higher. Italian yields fell 15-30bps across the curve on more conservative budget details,” ANZ Bank reported in a note.
“US equities were led higher by financials and industrials with real estate and utilities on the decline. The USD is rising and commodities are slightly higher. The USD was stronger against all in the G10. Oil dropped sharply after a larger than expected inventory build, but later rebounded.”
On the data front, Australia trade balance improved to a surplus of AUD1,604 million in August. July’s surplus was revised down slightly to AUD1,548 million (from AUD 1,551 million). August’s modest improvement reflects a 0.5 percent m/m rise in exports, while the growth in imports was just a touch lower at 0.4 percent m/m.
Meanwhile, the S&P/ASX 200 index traded 0.35% higher at 6,173.5 by 03:50 GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -60.20 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex
