Australia’s 10-year Treasury yields have updated a seven-year high to 3.338%hovering around 3,322% at press time, due to the Reserve Bank of Australia (RBA) rate hike.
The Australian central bank surprised bulls by beating 15bps of market forecasts with a 25bps hike in the benchmark rate to 0.35%.
In addition to the rate hike, the RBA statement also puts downward pressure on Australian bonds, which in turn fuels Treasury yields.
Statements such as “it is appropriate to withdraw extraordinary monetary assistance offered during the pandemic” as well as “we do not intend to reinvest proceeds from maturing government bonds” seem to support Australian yields and the currency.
However, it is worth noting that the absence of Japanese and Chinese traders restricts bond market movements in Asia.
Source: Fx Street
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