Australian bonds track weakness in U.S. Treasuries post softer 10-year auction

The Australian bonds slumped, tracking weakness in the U.S. Treasuries, after the latter rose for a third straight session as softer demand for benchmark 10-year notes pressured overall bond prices at the latest 10-year auction held overnight.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 4-1/2 basis points to 2.69 percent, the yield on 15-year note climbed nearly 4 basis points to 2.98 percent and the yield on short-term 2-year traded 3 basis points higher at 1.91 percent by 02:55GMT.

The US Treasury’s USD20 billion sale of 10-year notes showed weak demand from investors despite being sold off sharply going into the auction. The yield was 2.18 percent, which was higher than that expected at the bid deadline but the lowest since November.

Bids totalled nearly USD45.7 billion for a 2.28 bid-to-cover ratio, slightly better than last month’s 2.23 but below the average of 2.42. Indirect bidders, which include foreign central banks, took 55.3 percent, below the 57.9 percent last month.

After the auction, U.S. 10-year yields, which move inversely to prices, matched a high hit two weeks ago, while 30-year bonds touched three-week peaks.

Meanwhile, the S&P/ASX 200 index fell 0.17 percent to 5,759.50 by 02:55 GMT, while at 02:00GMT, the FxWirePro's Hourly AUD Strength Index remained highly bearish at 35.94 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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