Global bonds fell after two surprise interest rate hikes this week alerted investors that central banks are far from done fighting inflation.
This was shown in the surge in short-term bond yields which approached the highest level since March, while also seeing Australia's 3-year bond yield jump to the strongest level since 2011.
Investors again shed bond holdings after the Bank of Canada (BOC) joined the Reserve Bank of Australia (RBA) in surprising the market by raising interest rates on Wednesday.
The unexpected move has investors reassessing expectations for a Federal Reserve (Fed) interest rate cut later this year as the fight against inflation is far from over.
In the Asian session, US 10-year bond yields were little changed around their more than one-week high of 3.79% after jumping about 10 basis points this week.
This week's BOC and RBA results, however, are seen to have no significant impact on investors' expectations for next week's Fed meeting.
However, it is not impossible if the central bank experiences the same action given that inflation in the United States is still high despite the data showing a decrease.
Investors will look to another inflation data release next Tuesday to determine further expectations for the Fed's policy approach.
