Australian bonds plunge post hawkish RBA meeting minutes; investors eye June employment report

The Australian bonds plunged Tuesday after the Reserve Bank of Australia (RBA) maintained a hawkish tone in its July monetary policy meeting minutes, released earlier today. Further, the country’s employment report for the month of June, due later this week will guide safe-haven bond markets more clearly.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 4 basis points to 2.77 percent, the yield on 15-year note also surged 4 basis points to 3.07 percent while the yield on short-term 2-year climbed 8-1/2 basis points to 1.94 percent by 03:50 GMT.

The Australian dollar has surged to its highest level in more than two years after the Reserve Bank of Australia issued an upbeat assessment of the economy and discussed a higher cash rate.

The central bank has highlighted growing divergences in the domestic economy at its most recent policy meeting but said the outlook for the second quarter remained generally positive following a slow start to the year. However, Analysts are divided about when policymakers might signal for higher rates. Surging house prices and record debt levels suggest Australia is among the most vulnerable nations to rate increases.

Meanwhile, the ASX 200 index plunged 1.07 percent to 5,634.50 by 03:50GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bullish at 162.94 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest