Summary:
Australian Yield Curve (3-Year vs. 10-Year Bonds) From early 2019 through mid-2025 (projected), the Australian yield curve has shown a gradual flattening with intermittent steepening phases. Notably:
- 2020–2021: Both 3-year and 10-year yields remained subdued, reflecting accommodative monetary policy during the pandemic.
- 2022–2023: A sharp rise in yields—especially the 3-year—signalled aggressive rate hikes by the RBA to combat inflation.
- 2024–2025 (projected): The spread narrows, suggesting market expectations of rate stabilisation or potential easing. The modest upward slope implies a cautious optimism about long-term growth without excessive inflation fears.
Figure 1: Australia 3 and 10-year Bond Yield Spread
Figure 2: US 2 and 10-year Bond Spread
To learn more about yield curves and their predictive power, visit this article or this one.