| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.339 | 3.358 | -0.019 |
| Australian 10-year bond (%) | 4.234 | 4.247 | -0.013 |
| Australian 30-year bond (%) | 4.946 | 4.955 | -0.009 |
| United States 2-year bond (%) | 3.716 | 3.77 | -0.054 |
| United States 10-year bond (%) | 4.258 | 4.277 | -0.019 |
| United States 30-year bond (%) | 4.8433 | 4.8454 | -0.0021 |
Overview of the Australian Bond Market
Australian government bond yields declined across the curve on August 13, 2025, as inline wage data reinforced RBA easing bets post-cut, though longer ends tempered amid global tariff watchfulness. The 2-year yield dropped 5 basis points to 3.28%, the 5-year fell 4 basis points to 3.58%, the 10-year decreased 4 basis points to 4.20%, and the 15-year eased 3 basis points to 4.56%. Monthly, yields have fallen (10-year down 12 basis points), reflecting dovish momentum despite sticky annual wage growth at 3.4% (0.1% surprise).
Q2 wage figures, released today at 0.8% quarterly (as polled), support the RBA’s view of inflation returning to target without wage spirals, per Governor Bullock’s data-dependent stance noting potential for “a couple” more cuts. June’s strong trade surplus (AUD 5,365 million) and July’s solid PMIs (Composite at 53.8) underscore resilience, potentially limiting deeper yield drops, while US-China truce extension (90 days) and inline US CPI (headline yearly 2.7%, slightly below poll) influence cross-border flows.
Bond traders eye US resilience in Trump’s trade war, with Fed swaps holding ~60% odds for a September 25 basis-point cut from 4.25%-4.5%, bolstered by EU/Japan deals reducing uncertainty and favoring higher-rates-longer, pressuring prices. Locally, net long positions likely grew post-wage data, with focus on shorter tenors amid equity rotations from banks to resources. Upcoming August 14 employment (poll 4.2% unemployment) could sway if it signals cooling labor, supporting bonds as hedges against volatility, though economic vigor may cap rallies. Dealers expect stable auction sizes for August-October per guidance, with tariff clarity aiding diversification.
Overview of the US Bond Market
US Treasuries rallied the most in nearly two weeks after traders boosted bets that the Federal Reserve will cut interest rates at its next meeting.
Tuesday’s inflation report, largely seen as benign by investors, and a chorus of US officials calling for lower borrowing costs bolstered the case for a reduction in September.
Interest-rates swaps now fully price in a quarter-point move next month, with some traders piling into bets on it being 50 basis points. The benchmark 10-year yield ended the session five basis points lower at 4.24%.
The rally showed how market sentiment has shifted dramatically from two weeks ago, when expectations for a September cut were less than 50%. That started to change in the aftermath of a weak payrolls report — culminating in the firing of the Bureau of Labor Statistics commissioner — which intensified President Donald Trump’s campaign to force the Fed to bring borrowing costs down.
Treasury Secretary Scott Bessent added to that call on Wednesday, urging policymakers to use the September meeting to kick off a cutting cycle. “We could go into a series of rate cuts here, starting with a 50 basis point rate cut in September,” Bessent said in a television interview on Bloomberg Surveillance Wednesday. “We should probably be 150, 175 basis points lower.”
