Bill Gross sees 'decaffeinated bear market' on the way for bonds


US yields jumped broadly with the two-year yield hitting 1.985 percent on Wednesday, the highest level since September 2008.

US Treasury yields rose to a 10-month high and the dollar fell following the news, published by Bloomberg on Wednesday.

Gold miners were boosted by a stronger price for the precious metal, with Newcrest Mining up 0.9 per cent at $22.86 and Evolution Mining up 2.8 per cent at $2.56.

Concern that China, the world's biggest holder of US Treasury bonds, could curb or stop buying government bonds, also pushed the dollar to a more than six-week low against the Japanese yen.

The Gordon Brown example highlights why Commonwealth Bank of Australia is saying Wednesday's reports over China and its US Treasury holdings are unreliable.

Meanwhile, the NZX 50 index closed 1.37 percent lower at 8,250.44; FxWirePro launches Absolute Return Managed Program.

China's showing once again that it's not afraid to wield the clout of its hoard of Treasuries to catch the attention of USA officials and the world's biggest debt market.

Elsewhere, the euro rose around half a cent against the weaker dollar, with rising 0.24% to 1.1965.

National Australia Bank strategist Alex Stanley said global demand for US Treasuries was a major risk to watch, "but one should be wary of extrapolating reports on China demand into views that yields are poised for an imminent surge higher".

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China is so heavily invested in United States public debt that it has an interest in keeping the market healthy, Bloomberg quoted Nathan Sheets, chief economist for PGIM Fixed Income, as saying.

"It's certainly more of a hawkish tilt in the minutes", said Karl Schamotta, director of global product and market strategy at Cambridge Global Payments in Toronto.

The dollar then rallied and was up 0.4 percent against the yen, although the USA currency is still down more than 1 percent against the yen this week after markets bet the Bank of Japan (BoJ) could start to tighten monetary policy faster than expected.

"The flush of money is being met by a flush of supply, and that produces higher rates", he said, noting that central banks have injected $14 trillion of liquidity into the market over the past five years.

Australian shares fell to their weakest level in over a week on Thursday, led by declines in the financial sector after Wall Street was pressured by a report that China may slow its buying of USA governments debt.

Then as now, analysts say that while America's biggest foreign creditor has the power to jolt USA bond markets, wide-scale selling by China is unlikely given that it has few alternatives to invest its $3.1 trillion in foreign-currency reserves, the world's largest stash.

It is possible that comments from the unnamed sources cited by Bloomberg and other outlets are connected to an ongoing trade dispute between the USA and China.

The tightening effect of such measures would likely have an impact on how many times the Fed raises interest rates this year, which is why we've seen a corresponding drop in the dollar.