The global bond market rout is continuing again today with Australian rates being pushed to their highest levels since earlier this year.
So far this morning the 3-year Australian Commonwealth Government Bond (ACGB) is up 4.2 basis points to 2.03%. That’s its highest level since April.
Further out the curve, the 10-year ACGB is trading at 2.82% up 4 points – its highest level since January.
What’s driving the move is the continued selling in US bonds which has pushed the 2-year Treasury (US markets use a 2-year short bond benchmark whereas Australia uses a 3-year bond) to 1.16% and the 10-year Treasury up to 2.40%.
While the 10-year bond is the highest level since July 2015, the reappraisal of the path of US growth, inflation and Fed interest rates has driven the 2-year to its highest level since April 2010.
Australian bond rates just can’t escape the upward thrust of US rates and remain under pressure.