Australian bonds plunge on profit-booking, tracking weakness in U.S. Treasuries

The Australian bonds plunged on the last trading day of the week as investors booked profits after a long rally this week. Also, weakness in the United States counterpart added to the sluggishness in the country’s debt market.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped nearly 5-1/2 basis points to 2.42 percent, the yield on 15-year note surged 5 basis points to 2.78 percent while the yield on short-term 2-year traded nearly 4 basis points higher at 1.69 percent by 03:40 GMT.

The US industrial production was flat after recording a solid 1.1 percent rise in April, broadly in line with the consensus (0.2 percent m/m). The weakness in manufacturing output was driven mainly by motor vehicle and parts production, which fell by 2.0 percent m/m. Outside of this category, manufacturing was down only 0.2 percent as computer and electronics production declined by 0.5 percent.

Meanwhile, the ASX 200 index traded 0.07 percent higher at 5,726.50 by 04:20GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bullish at 117.44 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex