Australian bonds are getting thumped

Australian government bond yields have ripped higher this morning after the US Federal Reserve lifted interest rates.

The yield on the benchmark Australian government 10-year bond rose from 2.76% just before the Fed decision to over 2.87% a short time ago – an unusually large move in the fixed income market for a short period of time.

Bond yields rise when prices fall. Markets anticipated the Fed’s decision to lift rates, but there was an unexpectedly hawkish outlook for rates in 2017 which has sparked a global bond sell-off.

Via, here’s the chart of the overnight trade in Australian 10-year bonds:

This chart shows the surge in bond yields since early November, just before Donald Trump unexpectedly won the US presidential election. The yield is now close to its 2016 high of 2.9%.

The Australian dollar has also been smoked this morning, falling almost a full cent to 0.7409.

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