Australian 10-year bonds yield hits highest since March 2017 tracking heavy sell-off in U.S. Treasuries

Australian government bonds slumped across the curve on last trading of the week Friday tracking heaving sell-off in the U.S. Treasuries. The U.S. 10-year Treasury yield hit highest since June 2011 of 3.12 percent on expectations of aggressive Federal Reserve monetary policy tightening.

The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, rose 2-1/2 basis points to 2.935 percent (14-month high), the yield on the long-term 30-year Note also jumped 2-1/2 basis points to 3.418 percent and the yield on short-term 2-year up 1-1/2 basis points to 2.072 percent by 03:30 GMT.

In the United States, Treasuries saw mixed performance overnight as little change in the short-end was contrasted by continued selling further out the curve, highlighted by fresh cycle highs in the 10-year Note yield, highest since June 2011 and 30-year Bond, highest since 2015.

In terms of speakers, markets received FOMC commentary Dallas Fed President Kaplan and Minneapolis Fed President Kashkari. Kaplan largely reiterated his call for 2018 economic growth to come in around 2.50-2.75 percent, adding that he saw the US economy as being either at or past the point of full employment. Markets now look ahead to what should be a quiet finish to the week on Friday with little data of note on tap.

In addition, heaving sell-off in the Australian bonds was also following by yesterday’s employment report, in which, employment conditions across Australia reached a record high last month in National Australia Bank’s (NAB’s) monthly business survey, amid overall above-average confidence among firms. According to the bank’s April figures, the employment index at +13 was, on a trend basis, at its highest level since the polling began in March 1997. NAB said this is consistent with a robust rate of jobs growth, of around 24K per month based on historical patterns. Australia added 22.6K jobs in April, reversing March’s fall of -0.7K. But the unemployment rate rose to 5.6% last month, up from 5.5% seen in March.

Meanwhile, the S&P/ASX 200 index traded 0.50 percent lower at 6,089.5 by 03:40 GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 27.50 (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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