| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.293 | 3.36 | -0.067 |
| Australian 10-year bond (%) | 4.157 | 4.24 | -0.083 |
| Australian 30-year bond (%) | 4.865 | 4.941 | -0.076 |
| United States 2-year bond (%) | 3.904 | 3.906 | -0.002 |
| United States 10-year bond (%) | 4.353 | 4.357 | -0.004 |
| United States 30-year bond (%) | 4.8452 | 4.843 | 0.0022 |
Overview of the Australian Bond Market
U.S. Treasury yields started Friday 13th session modestly higher, in relatively calm trading considering Israel’s attack on Iran. Israel’s attacks seem to have spared Iran’s oil infrastructure, a decision that could limit the conflict’s implications for the global economy, at least initially.
Increasing attention to the possibility of a Fed rate cut amid some weaker data this week—although the market still deems a rate cut next week highly unlikely. The 10-year yield trades near 4.387%, versus 4.357% Thursday, and the two-year yield is near 3.941%, up from 3.904% a day ago.
U.S. Treasury yields edge lower as investors search for safe havens following Israel’s attack on Iran’s nuclear facilities. Falls are contained, however, as investors await next week’s Federal Reserve announcement for guidance on the outlook for interest rates. The Fed to keep the policy rate range at 4.25%-4.50%. Money markets aren’t pricing in a rate cut until September at the earliest, LSEG data show.
The University of Michigan said Friday its preliminary index of consumer sentiment for June was 60.5, up from 52.2 in May, and higher than the 54.0 level forecast by economists polled by The Wall Street Journal.
Overview of the US Bond Market
Markets are now almost certain of a July interest rate cut after a week of underwhelming economic data, as the RBA’s former chief economist Luci Ellis questions whether the Central Bank has waited too long to ease policy. Financial markets now ascribe a 97% chance that the RBA will deliver the third rate cut this year when the board next meets July 7 to 8, cutting the cash rate to 3.6% from 3.85%.
Bets on another rate cut shot up last week after data released on Wednesday showed that GDP grew by just 0.2% in the first three months of the year, far short of the RBA’s expectation for an expansion of 0.45%. The figures were followed by separate data on Thursday, showing consumer spending barely grew in April, with economists warning the uncertainty from Donald Trump’s trade war could cause both businesses and households to rein in spending. Financial markets predict the central bank will cut the cash rate to 3.1% by the end of the year.
