Australian bonds lose ground tracking U.S. peer on supply overflow post large Treasury auction

Australian bond yields fell during Asian session Thursday, tracking a similar movement in U.S. counterpart following an oversupply in the debt market after the United States Treasury department auctioned off $31 billion in 7-year notes on Wednesday.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 1 basis point to 2.565 percent, the yield on the long-term 30-year bond jumped 1-1/2 basis points to 3.088 percent and the yield on short-term 2-year also rose nearly 1-1/2 basis points to 1.990 percent by 04:30GMT.

According to a report from CNBC, "The Treasury Department auctioned $31 billion in seven-year notes Wednesday at a high yield of 2.844 percent. a day after it auction $37 billion in five-year notes and two days after selling $36 billion of two-year notes. The bid-to-cover ratio, an indicator of demand, was 2.65. Indirect bidders, which include major central banks, were awarded 59.5 percent. Direct bidders, which includes domestic money managers, bought 19 percent."

Further, the report stated "The Treasury plans to borrow $329 billion in the current July through September quarter, 74 percent higher than the $189 billion borrowed in the same quarter one year ago and the largest July to September amount since 2010".

Meanwhile, the S&P/ASX 200 index traded 0.24 percent higher at 6,339.50 by 04:40GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bearish at -118.74 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex