While AUD has an effective duration of 4.41 years, putting the ETF in the intermediate area of the duration spectrum, the fund is still sensitive to action in Australian 10-years. For example, the ETF sank on Monday when the yield on Australian 10-years crossed for 4%, touching its highest levels in more than four years. On Tuesday when those yields drop 24 basis points, AUD surged 3.6%.
With more rate cuts and downside for the Aussie expected, bond investors may want to give AUD some breathing room for now.
PIMCO Australia Bond Index Fund
ETF Trends editorial team contributed to this report.