Australian 10-year bond yield worsens to 2-month low as Italy's political crisis deepens

Australian 10-year government bond yield worsened performance to near 2-month low as investors bumped into safe-haven assets on deepening fears over the global geopolitical situations as Italy faces an intense political crisis, evolving from the hung Parliament, a result of the March elections.

The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, plunged 8-1/2 basis points to 2.63 percent, the yield on the long-term 30-year Note also slumped 8-1/2 basis points to 3.18 percent and the yield on short-term 3-year traded nearly 5 basis points down at 2.08 percent by 04:00 GMT.

Treasuries rallied during North American session Tuesday, pulling down yields, as political turmoil in Italy and Spain sent ripples through global financial markets, sparking demand for haven assets such as U.S. and German government paper.

Italian bonds sold off sharply, on fears of a new general election that could effectively turn into a referendum on the euro, while Spanish bonds were also under pressure ahead of a confidence vote later this week on Prime Minister Mariano Rajoy.

The turmoil comes after Italian President Sergio Mattarella on Sunday blocked two anti-establishment parties — the 5 Start Movement and the League — from taking power after rejecting their Eurosceptic candidate for economy minister.

Meanwhile, the S&P/ASX 200 index traded 0.23 percent higher at 5,980.00 by 04:30 GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -51.41 (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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