SYDNEY, March 15 Reuters Australian threeyear bond futures dipped to a oneweek low on Monday, implying yields of nearly 0.3, as investors feared a stellar economic recovery would rekindle inflation and spur interest rate hikes.

A global bonds selloff gathered momentum last month on worries massive U.S. fiscal stimulus and pentup consumer demand would flare inflation with expanding vaccination campaigns expected to bring an end to lockdowns.

In Australia, the countrys central bank responded last week by doubling the fee it charges for lending out April 2023 and April 2024 government bonds. Moreover, Reserve Bank of Australia RBA Governor Philip Lowe also forcefully pushed back on market pricing for rate hikes.

While that did calm the market, bond yields have again resumed their upward trek.

Looking ahead, and despite the recent RBA tweaks… we believe there is still some value in holding a short position, said Robert Thompson, a Sydneybased rates strategist at RBC.

The RBAs tweaks have certainly reduced the outright yields on Apr23s and Apr24s, but it hasnt shifted overall basket repo rates enough to completely get rid of the arbitrage, Thompson added.

At very least, the change in pricing probably hasnt forced stopouts, although it may see some choosing to take their positions off.

The spike in bond yields did little to push the Australian dollar higher which was down for a second straight session at 0.7747, drifting away from a threehigh high atop 80 U.S. cents…