Australian bonds suffer tracking U.S. Treasuries even as Trump faces impeachment inquiry

The Australian government bonds suffered during Asian session Thursday tracking a similar movement in the U.S. Treasuries even as President Donald Trump faced an impeachment inquiry, although it appeared to be less controversial than investors had thought, thus forcing them to shift back to riskier equities, weighing on bond prices.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, edged nearly 1 basis point higher to 0.964 percent, the yield on the long-term 30-year bond hovered around 1.568 percent and the yield on short-term 2-year slipped 1 basis point to too traded flat at 0.744 percent by 05:20GMT.

Global risk sentiments improved after US president Trump hinted that a trade deal with China could come “sooner than you think”. Consequently, USD and Wall Street rose, while UST bonds sold off overnight with the 10-year yield back up to 1.72 percent, looking past the US’ House impeachment bid against Trump, the release of a confidential memorandum of its July 25 call with the Ukrainian president, and ongoing Brexit uncertainties with UK PM Johnson demanding a non-confidence vote to trigger an election, OCBC Treasury Research reported.

That said, the NY Fed increased its overnight repo operations from $75b to $100b and doubling the maximum size of the 14-day repo operation to $60b as funding conditions remained tight ahead of the quarter-end, which raises the likelihood of a more structural fix, the report added.

Meanwhile, the S&P/ASX 200 index edged tad -0.67 percent down to 6,655.50 by 05:25GMT.