Bond rout returns

Last night saw a big move in global bond yields. The trigger was the return of European inflation in May registering an overpowering 0.3% on the year:

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That sent German bunds into a tizzy with the long end flogged 21bps (or 40%) to 0.71%:

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The US followed despite weak data on the night and its yield up trends now look solid if muted across the curve as we approach a tightening Fed:

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Australian yield were also hit hard, with the RBA carrying a whip as well, though perhaps not as bad as one might have expected:

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The Australian curve is still too steep for what’s coming:

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But the spreads to the US remain low and declining:

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Same against Germany:

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If north Atlantic bond markets keep selling like this, albeit steadily, then that will be beneficial to the Aussie eventually, no doubt the RBA’s great hope.

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