The bond market is responding in due kind after the positive data
Positive retail sales and Q1 economic data (which will feed into this week's GDP reading) is helping to provide a strong tailwind to the aussie so far today, as AUD/USD trades near the highs for the day currently.
But another tailwind that is contributing to the feel-good factor is Australian bond yields. 10-year yields are higher by 3 bps on the day, and that's adding to the list of positives for the aussie today.
However, if yields are to go by, the rally here could be met with a reality check soon enough. The jump in AUD/USD over the last four days is markedly more significant than the yields spread narrowing between Australian and US 10-year yields.
Though this is only one of the many things that goes into trading/investor sentiment, it's worth noting than yields spread between the two remains near the lows and sits at 18 bps in the favour of US bonds - having hit 21 bps last week.
