“Australia’s bonds fell, pushing 10- year yields to the highest since September, after a Federal Reserve decision to stimulate the economy by expanding Treasury buying crimped investor appetite for safer assets.
The Australian dollar traded near the highest level in almost three months versus its U.S. peer, which tends to be debased by expansionary monetary policy. The Federal Open Market Committee said interest rates will stay low as long as U.S. unemployment remains above 6.5 percent and inflation is in check. The Australian and New Zealand dollars were buoyed as global equities gained and before a private report tomorrow forecast to show Chinese manufacturing is strengthening.
“The market is starting to reflect the global economic backdrop that is looking somewhat better than it had over recent times,” said Gavin Stacey, chief interest-rate strategist in Sydney at Barclays Plc, referring to Australian bond yields. “We think yields in general across the curve are likely to grind higher.”
The 10-year Australian rate rose nine basis points, or 0.09 percentage point, to 3.31 percent as of 4:10 p.m. in Sydney. The equivalent U.S. yield reached 1.72 percent, the most since Nov. 7.
Australia’s dollar was at $1.0551 from $1.0555 yesterday, when it climbed as high as $1.0586, the strongest since Sept. 14. The Australian dollar dropped versus its New Zealand counterpart to NZ$1.2491, the weakest since Oct. 12. The New Zealand dollar fetched 84.43 U.S. cents from 84.36 yesterday, when it touched 84.54, the most since Feb. 29.”
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