The Australian government bonds slumped Friday as investors booked profit, after relishing two weeks of rally. Also, firm crude oil prices discouraged investors from safe haven buying.
The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose 9 basis points to 2.100 percent and the yield on short-term 2-year note jumped 6 basis points to 1.630 percent by 05:15 GMT.
The latest polls by various corporate bodies in the United Kingdom in run up to the June 23 Brexit referendum indicate that the percentage of citizens in favor of “leaving” the European Union (EU) has outnumbered those who want to “remain”, raising the possibility that Britain might leave the EU after 43 years of membership in the bloc.
According to a new UK poll by IG/Survation showed the Leave side is ahead of Remain by 45-42 percent. This is a somewhat narrower pro-Brexit balance than most other recent surveys — which all suggest that the outcome of the EU referendum in one week's time is too close to call with confidence.
Similarly, a new UK poll by Ipsos-Mori, 53 percent participants favoured leaving the EU and 47 percent supported for remaining. This is in line with the other recent surveys showing a swing to a moderate pro-Brexit balance, but contrasts markedly with the previous IPSOS-Mori poll in May that found a double-digit net balance in favour of 'Bremain'.
Moreover, The Bank of England (BoE) MPC meeting has ended unanimously in the decisions to maintain the official Bank Rate at 0.5 percent and keep the programme of asset purchases paused at 375 billion pounds, as universally expected.
Also, the Bank of England warned that Brexit could materially affect inflation and the GDP outlook, push the pound down 'sharply', and cause adverse spillovers to the global economy.
“European markets are currently driven by fear with the UK referendum result now only a week away, and bond prices are tipped to rise and more polls showing that the `leave' campaign is in the ascendancy in the Brexit vote drove a continued flight to safe haven assets,” the ANZ economists said in a note.
“On a daily basis, major bond markets are seeing yields fall to historic lows while more of the core markets are taking yields through the zero lower bound,” they added.
In addition, the Australian bonds have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the Reserve Bank of Australia's target. The International benchmark Brent futures rose 1.21 percent to $47.76 and West Texas Intermediate (WTI) climbed 0.80 percent to $46.58 by 05:30 GMT.
Markets will remain keen to focus on next week’s RBA June meeting minutes on Tuesday at 01:30 GMT. Meanwhile, the benchmark Australia's S&P/ASX 200 index was trading down 0.04 percent, or 2 points, at 5,110.5 by 05:30 GMT.
The material has been provided by InstaForex Company – www.instaforex.com