Australian bonds slump as sell-off continues in global debt market after ECB President Draghi’s comments

The Australian bonds slumped Thursday as the massive sell-off continued in global debt markets in response to the European Central Bank (ECB) President Mario Draghi’s comments late Tuesday and Wednesday.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 4-1/2 basis points to 2.51 percent, the yield on 15-year note also surged 4-1/2 basis points to 2.86 percent and the yield on short-term 2-year traded 2-1/2 basis points higher at 1.72 percent by 03:40 GMT.

The Australian dollar stood near 3-week lows on Wednesday versus a euro hoisted up by remarks from European Central Bank Governor Mario Draghi, which were seen as signalling a change in its super-easy policy stance. However, the Aussie fared better against the US dollar and yen - both of which saw heavy selling when Draghi said that deflationary forces had been replaced by reflationary ones.

Draghi’s speech at the ECB Forum in Sintra, Portugal, was intended to strike a balance between recognising the currency bloc’s economic strength and warning that monetary support is still needed, said the officials, who spoke separately and who asked not to be named as internal discussions are confidential, Bloomberg reported.

Meanwhile, the ASX 200 index climbed 0.59 percent to 5,771.50 by 04:10GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 45.06 (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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