| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.806 | 3.768 | 0.038 |
| Australian 10-year bond (%) | 4.398 | 4.357 | 0.041 |
| Australian 30-year bond (%) | 4.921 | 4.873 | 0.048 |
| United States 2-year bond (%) | 4.268 | 4.214 | 0.054 |
| United States 10-year bond (%) | 4.495 | 4.436 | 0.059 |
| United States 30-year bond (%) | 4.711 | 4.641 | 0.070 |
* Implied yields from September 2024 futures. As at 29 July.
LOCAL MARKETS
Australia’s 10-year government bond yield climbed 10 basis points to 4.45% despite dovish expectations surrounding the RBA’s upcoming policy decision. Markets are currently assigning a 95% probability that the RBA will cut its 4.35% cash rate by 25bps at its meeting next week. This follows recent data showing underlying inflation has moderated faster than the central bank had anticipated.
There were gains across the curve with the exception of the 12-month note, declining 4 basis points to 3.90%.
Key domestic events this week include the Westpac consumer sentiment survey and the NAB business survey on Tuesday, both of which could provide further insights into the economy’s strength.
US MARKETS
The benchmark 10-year Treasury yield — a main baseline for consumer and corporate loans that’s heavily dependent on the long-term outlook — was largely unchanged on Monday, up 1 basis point to 4.50%. The 2- and 3-year Treasury yield declined 1.9 and 1.4 basis points to 4.28% and 4.31%, respectively.
Key highlights of today’s bond market:
- Five-year breakeven rate rises above the 30-year gauge. Bond investors are betting that the Federal Reserve will have to contend with rising prices once again, and soon, in the wake of President Donald Trump’s plan to slap tariffs on trading partners and some industrial sectors. Short-term inflation expectations are rising above longer-term ones for the widest gap in two years. The so-called five-year breakeven rate, which tracks the yield differences between Treasuries and inflation-linked bonds, reached 2.64% Monday, 27 basis points higher than the 30-year gauge, and marking the biggest difference between the two since 2023.
- Median inflation expectations were unchanged at 3.0 per cent at both the one- and three-year-ahead horizons in January, a monthly Federal Reserve Bank of New York survey showed. Median five-year-ahead inflation expectations rose by 0.3 percentage point to 3.0 per cent.
