Australian 10-year bond yields hit near 1-1/2 year high as strong U.S. data strengthens March Fed rate hike expectations

The Australian 10-year bond yields hit near 1-1/2 year high Thursday after strong private employment data from the United States, released late yesterday almost confirmed that the Federal Reserve will adopt an interest rate hike at the March 14-15 monetary policy meeting. In addition, the central bank Chair Janet Yellen’s recent comments, hinting at a possible hike this month, added to the expectations.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped nearly 7 basis points to 2.94 percent, the yield on 15-year note climbed 6 basis points to 3.34 percent and the yield on short-term 2-year traded 3 basis point higher at 1.92 percent by 04:50 GMT.

Wednesday's ADP data showed U.S. private payrolls grew by 298,000 jobs last month, the largest increase since December 2015. The gain was well above economists' expectations for a 190,000 increase. The solid report made it almost certain the U.S. Fed will hike rates at its March 14-15 meeting, and increased the likelihood of more rate rises during the year.

Further to that, recent comments from the Fed Chair Yellen, specifying that a March rate hike is definitely on the cards, if the economy holds momentum, added to the rise in market expectations and investors have quite already price in for a rate hike this month.

Meanwhile, the ASX 200 index traded 0.16 percent up at 5,743.50 at 05:10GMT, while at 05:00GMT, the FxWirePro's Hourly AUD Strength Index remained slightly bearish at -76.92 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex