The Australian dollar tumbled below US72¢ and bond yields scaled fresh highs as investors prepare for a bevy of interest rate increases and commodity prices retreat.
The Australian dollar sank below US72¢ as COVID-19 infections in mainland China spread to Beijing, shaking commodity prices and regional sharemarkets on Monday amid a global battle to control inflation.
Sharemarkets in Japan, China and Hong Kong posted losses and iron ore and coal futures traded in the red as financial markets responded to parts of the Chinese capital being locked down to mitigate COVID-19. More importantly, core inflation, the preferred Reserve Bank of Australia measure, is forecast to rise 3.4 per cent on the annual reading, from a 2.6 per cent increase in the December quarter.
US two-year yields, which reflect interest rate expectations, rose to 2.98 per cent, the highest since December 2018, before dipping back to 2.86 per cent. The 10-year rate stood at 2.90 per cent after reaching 2.98 per cent last week, also the highest since December 2018.and the 10-year rate topped a seven-year peak of 3.16 per cent.
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