SYDNEY/WELLINGTON: Australian bond yields fell to record lows on Wednesday as a rout in oil and stocks sent investors scurrying to the safety of the yen and sovereign debt.
The 10-year cash yield fell to 2.6 percent, down all the way from 3.1 percent last month and narrowing the spread over 3-year bonds to 56 basis points, the thinnest since May 2013.
The three-year futures contract leapt 6 ticks to 97.950, while the 10-year contract added 7 ticks to 97.4050, having touched a record high of 97.4650.
Aiding bonds was the likelihood that euro zone data due later on Wednesday would show the first annual fall in consumer prices since 2009.
Tumbling oil prices, political uncertainty in Greece and broad concerns about global growth have spooked investors, forcing many of them to seek shelter in government debt.
The Australian dollar was little changed on the day, hovering at $0.8072 after failing to build on a peak of $0.8158 touched on Tuesday, and was not far off a 5-1/2-year trough of $0.8036.
Raiko Shareef, a currency strategist at Bank of New Zealand, said the Aussie could break a fresh trough by the end of the week given a strong US dollar and falling oil prices. He forecasts the Aussie at 78 cents by December and 75 cents in 2016.
The Aussie skidded nearly one yen to 95.80, having been as high as 102.8 in November, while the kiwi dropped to a three-week low of 91.59. The commodity-linked currencies even struggled against an unloved euro, which bounced to A$1.4725, from a one-month trough of A$1.4597.
The New Zealand dollar slipped to a session-low of $0.7737, easing from a high of $0.7808 hit offshore after global dairy prices rose at the latest auction. It was last at $0.7753, just a touch lower on the day.
Signs of recovering dairy prices helped the kiwi to outperform against the Aussie which fell to a post-float low of NZ$1.0383.
New Zealand government bonds rose, pushing the 10-year yield 5.5 basis point lower to 3.54 percent its lowest since May 2013.
Comments
Comments are closed.