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Bonds sell off in Asia after bullish ECB commentary

Asian sovereign bond markets on Wednesday continued a global sell-off that had been triggered by hints from Mario Draghi that European Central Bank monetary policy could become less accommodative from next year.

The yield on 10-year Japanese government bonds was up 0.7 basis points to 0.054 per cent, snapping back after four consecutive sessions of decline. Bond yields move in the opposite direction to price.

The equivalent yield on Australian bonds (known in FastFT circles as “George Lazenbies”) was up 0.7 basis points to a five-week high of 2.43 per cent.

The yield on the benchmark 10-year US Treasury was down 0.5 basis points in Asia at 2.1998 per cent, conceding some of Tuesday’s 6.8bp rise that came in the wake of Mr Draghi’s comments.

The ECB president, speaking in Portugal at the central bank’s annual conference, said he was “confident” the Bank’s policies would restore inflationary pressures in the eurozone and that the economy would recover from its recent financial crises.

The euro was up 0.1 per cent in Asia at $1.1349 and its highest level since last August, consolidating its 1.4 per cent gain on Tuesday in the wake of Mr Draghi’s comments. Yields on German and UK bonds also closed higher yesterday.