The Australian bonds slumped Wednesday, tracking firmness in the U.S. Treasuries after the overnight 3-year note auction showed up strongly. Markets will now look forward to the Reserve Bank of Australia (RBA) Governor Philip Lowe’s speech, scheduled to be held on August 10 for further direction in the bond market.
The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 1-1/2 basis points to 2.65 percent, the yield on the 15-year note climbed 1 basis point to 2.94 percent while the yield on short-term 2-year hovered around 1.79 percent by 03:20 GMT.
U.S. Treasury yields rose on Tuesday, bolstered by strong demand for three-year notes in an overall quiet market as investors awaited the sale of more debt securities this week and the expected reduction of the Federal Reserve's balance sheet next month. The note auction showed up a high yield of 1.520 percent, compared with market expectations of 1.530 percent at the bid deadline.
Bids totalled USD75.1 billion for a 3.13 bid-to-cover ratio, up from last month's 2.87. The 3.13 cover was the highest since October 2015. Indirect bidders, consisting of foreign central banks, took a robust 64.1 percent, higher than the 52.6 percent demand from July's auction.
Meanwhile, the S&P/ASX 200 index traded 0.60 percent higher at 5,715.50 by 03:20 GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -42.97 (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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