Australian bonds slump following weakness in U.S. Treasuries; retail sales data in focus

Australian government bonds slumped on Wednesday following board weakness in the U.S. Treasuries. Yields on the benchmark 10-year US Treasury hit a nine-month high overnight, climbing to 2.5 percent after the Bank of Japan’s trimmed its purchases of super-long debt.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 6 basis points to 2.703 percent, the yield on the long-term 30-year note jumped 5-1/2 basis points to 3.404 percent and the yield on short-term 2-year climbed 2-1/2 basis points to 2.035 percent by 03:40 GMT.

In the United States, Treasuries saw downward pressure across most of the curve, despite little change in the short-end, highlighted by the 10-year Note yield breaking above the 2.50 percent mark for the first time in the past ten months, alongside further gains in equities following the earlier announcement from the Bank of Japan (BoJ) of plans to purchase fewer long-term JGBs.

Markets now look ahead to another quiet session in terms of data on Wednesday, highlighted by import prices and followed by a 10Y-year Note auction later in the session. In terms of speakers, markets also receive scheduled commentary from Chicago Fed President Evans and Dallas Fed President Kaplan.

Meanwhile, the S&P/ASX 200 index traded 0.83 percent lower at 6,058.5 by 03:50 GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 41.37 (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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