| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.745 | 3.815 | -0.07 |
| Australian 10-year bond (%) | 4.375 | 4.437 | -0.06 |
| Australian 30-year bond (%) | 4.952 | 4.994 | -0.04 |
| United States 2-year bond (%) | 3.9494 | 3.896 | 0.05 |
| United States 10-year bond (%) | 4.2818 | 4.213 | 0.07 |
| United States 30-year bond (%) | 4.5968 | 4.539 | 0.06 |
LOCAL MARKETS
The S&P/ASX 200 Index fell 1.4% on Wednesday, dropping below 7,800 to reach a seven-month low after US President Donald Trump ruled out exempting Australia from his 25% tariffs on aluminium and steel. These metals account for nearly $1 billion of Australia’s exports, raising concerns about economic fallout.
Heavyweight miners led the decline, with BHP Group (-1.4%), Fortescue Metals (-1.4%), and Rio Tinto (-2.4%) all posting losses. Additionally, reports surfaced that Rio Tinto sold $9 billion in US investment-grade bonds on Tuesday to finance its large-scale acquisition of Arcadium Lithium (-1%). Broader market weakness extended to financial, healthcare, and technology stocks, with Commonwealth Bank (-1.8%), Pro Medicus (-1.7%), and Xero (-1.3%) also recording significant declines.
USA Markets
The yield on the US 10-year Treasury note fell about 7bps to 4.23% on Monday, approaching December lows seen last week, as concerns over the impact of Trump’s trade policies on the US economy intensified. In a Fox News interview, President Trump declined to rule out a recession following his administration’s tariff policy changes, describing the current economic phase as a “period of transition.”
Meanwhile, Fed Chair Powell acknowledged rising economic uncertainty last week. Investors now turn their focus to upcoming CPI and PPI data, ahead of next week’s FOMC meeting, where the Fed will release updated economic projections. Recent economic data has raised some red flags, with the latest jobs report signalling a softening labour market, while the full effects of the DOGE cuts have yet to materialize. The ISM Manufacturing PMI indicated that businesses are already experiencing the first operational disruptions from the new administration’s tariff policy.
Investors looking for a safe place to hide are shovelling money into ultra-short bond ETFs as Donald Trump’s economic policies stoke recessionary concerns and a stock-market rout. The cohort has taken in more than $16 billion so far this year, led by products such as the iShares 0-3 Month Treasury Bond ETF (ticker SGOV), which has seen more than $7 billion come in. The fund took in $1.4 billion last week alone, its largest inflow on record. And investors have added $3.2 billion to the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL), about half of which came in last week in what is its biggest inflow since November 2023.
