Australian bond yields drop as ASX 200 turns risk averse on trade tensions

Aussie bond yields drop along with stocks as trade tensions escalate.
China bans imports of red meat from Australia.

Australia's government bond yields are flashing red on Tuesday, as the domestic stock market is putting in a negative performance seemingly due to the nation's escalating trade tensions with China.

At press time, the yield on the 10-year government bond is seen at 0.95%, down 2.5 basis points on the day. Meanwhile, the two-year yield, which is sensitive to near-term interest rate expectations, is trading at 0.23%, representing a 1.3 basis point drop on the day.

Stocks, too, are feeling the pull of gravity as evidenced by the benchmark S&P/ASX 200 index's 1.5% decline.

The risk-off sentiment could be attributed to China's decision to ban the import of red meat from Australia's big four major abattoirs, which represent 35% of Australia's total beef exports to China.

The decision to blacklist the red meat abattoirs has come just days after China flagged plans to introduce an 80% tariff on Australian barley, according to ABC News. "China is playing diplomatic games with Australia", said Southern Queensland University's Ben Lyons.

The escalating situation on the trade front is also hurting the Aussie dollar. At press time, AUD/USD is trading at 0.6450, representing a 0.6% decline on the day.

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.