Australian bonds surge tracking U.S. Treasuries post solid demand at 7-year auction

The Australian bonds surged Friday after the yield spread between shorter and longer-dated U.S. Treasuries grew on Thursday in the aftermath of a tax plan that raised concerns about faster growth in the federal deficit and borrowing.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slumped 2-1/2 basis points to 2.84 percent, the yield on the 15-year note also plunged 2-1/2 basis points to 3.12 percent and the yield on short-term 2-year traded nearly 1 basis point higher at 1.97 percent by 02:05GMT.

The two-year Treasury yield reached a near nine-year high and the 10-year yield hit an 11-week peak before they retreated on bargain-hunting and strong demand at a $28 billion auction of seven-year notes, which was the final part of this week's USD88 billion fixed-rate debt supply.

On Wednesday, President Donald Trump proposed steep tax cuts for most Americans and businesses but provided scant details on how to offset them without adding to the country's USD20 trillion in national debt.

Meanwhile, the S&P/ASX 200 index traded 0.09 percent lower at 5,654.50 by 02:30 GMT, while at 02:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bearish at -112.02 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest