Australian bonds plunge after Q4 CPI cheers investors amid recovery in financial markets

The Australian bonds plunged during Asian session Wednesday after the country’s consumer price inflation (CPI) for the fourth quarter of this year cheered market investors even as cases of Coronavirus continued to rise in various parts of China.

However, financial markets seem to stabilise, with Wall Street showing a rebound from its worst sell off in four months amid a tech stock rally in the overnight session.

The yield on Australia’s benchmark 10-year note, which moves inversely to its price, jumped 7-1/2 basis points to 1.036 percent, the yield on the long-term 30-year bond also surged nearly 7-1/2 basis points to 1.636 percent and the yield on short-term 2-year gained a little over 4 basis points to trade at 0.718 percent by 03:50GMT.

Apple posted record revenue and a return to profit growth amid strong iPhone and AirPod sales, but warned of the impact from the coronavirus in China, whereas Starbucks had closed half its China stores amid the coronavirus outbreak. UST bonds also bear-steepened following a 7-year auction with the 10-year yield higher at 1.66 percent, OCBC Treasury Research reported.

Asian markets will be searching for a modicum of stability today, especially with the Hong Kong market re-opening today and the FOMC meeting expected to remain static but Powell’s press comments will be closely dissected as usual, the report added.

Meanwhile, the S&P/ASX 200 index traded flat at 6,973.00 by 03:55GMT.