Summary:
Global and Domestic Bond Market Trends
Australian Yield Curve
The AU 3s10s spread has rebounded sharply since mid-2023, reaching ~1.0% by July 2025. Key takeaways:
- Steepening trend suggests growing confidence in medium-term growth
- RBA’s cautious stance has kept short-end yields relatively anchored
- Long-end movement reflects global rate normalisation and domestic fiscal stability
Figure 1: Australia 3 and 10-year Bond Yield Spread
US Yield Curve
The US 2s10s spread narrowed to –0.35%, continuing its gradual climb from deeper inversion levels seen in 2022–2023. This shift reflects:
- Easing recession fears, supported by softer inflation data
- Dovish Fed tone, hinting at a potential policy plateau
- Investor repositioning, with increased demand for longer-dated securities
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.