Australian 10-year bond yield hits 2-week high as U.S. counterpart reverses to 3 pct mark

Australian government bonds plunged on Thursday as U.S. Treasury yields climbs toward 3 percent level as eurozone bonds sell off. The U.S Treasuries pushed lower across the curve, finding initial momentum from overnight activity and solidified following ECB signals of a possible end to QE at next week's policy meeting.

The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 7-1/2 basis points to 2.838 percent, the yield on the long-term 30-year Note jumped 7 basis points to 3.355 percent and the yield on short-term 2-year up 2-1/2 basis points to 2.106 percent by 03:40GMT.

In the United States, markets received a mixed bag, highlighted by a pullback in April trade balance, decreasing to -$46.2 billion, from -$47.2 billion in March) and downward revisions to final 1Q18 non-farm productivity, increasing +0.4 percent, versus +0.3 percent in the last quarter of this year.

In terms of trade developments, threat levels continued to rise with the White House now discussing the possibility of additional penalties against Canada in the wake of news that they might impose $13 billion in tariffs on US goods. On balance, none of this serves anyone particularly well, especially the average worker who stands to potentially lose out if companies are reluctant to expand in the face of uncertainty (as recent surveys are beginning to suggest). Markets now look ahead to a lighter flow of data on Thursday, highlighted by jobless claims and consumer credit releases, ahead of wholesale sales on Friday.

Investors still taking cues from the Wednesday better-than-expected GDP data, Australia’s gross domestic product grew 1 percent q/q in seasonally adjusted terms in the first three months of 2018, according to the Australian Bureau of Statistics. That was above economists’ estimates compiled by Reuters forecasting 0.9 percent growth and above the revised 0.5 percent growth for the previous quarter.

Meanwhile, the S&P/ASX 200 index traded 0.23 percent higher at 6,068.5 by 03:50 GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bullish at 121.40 (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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