Australian bonds witness sharp plunge on global sell-off after ECB President Draghi sounds bullish

The Australian bonds witnessed a sharp decline Wednesday as investors involved in a massive global sell-off after the European Central Bank (ECB) President Mario Draghi remained slightly bullish in his commentary late Tuesday.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 7 basis points to 2.44 percent, the yield on 15-year note surged nearly 8 basis points to 2.80 percent and the yield on short-term 2-year traded 2-1/2 basis points higher at 1.68 percent by 04:10 GMT.

Asian sovereign bond markets on Wednesday continued a global sell-off that had been triggered by hints from Mario Draghi that European Central Bank monetary policy could become less accommodative from next year.

The ECB president, speaking in Portugal at the central bank’s annual conference, said he was “confident” the Bank’s policies would restore inflationary pressures in the eurozone and that the economy would recover from its recent financial crises, FT reported.

Lastly, the US consumer remains in an upbeat mood with June confidence coming in above expectations at 118.9. The party seems to be happening now with the present situation index lifting to 146.3, while future expectations dipped to 100.6.

Meanwhile, the ASX 200 index jumped 0.73 percent to 5,682.50 by 04:30GMT, while at 04:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 23.48 (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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