| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.37 | 3.37 | 0 |
| Australian 10-year bond (%) | 4.254 | 4.26 | -0.006 |
| Australian 30-year bond (%) | 4.953 | 4.965 | -0.012 |
| United States 2-year bond (%) | 3.954 | 3.935 | 0.019 |
| United States 10-year bond (%) | 4.405 | 4.413 | -0.008 |
| United States 30-year bond (%) | 4.905 | 4.9274 | -0.0224 |
Overview of the Australian Bond Market
On Wednesday, 18 June 2025, Australia’s bond market saw a quiet but steady rally, as investors took a defensive stance ahead of a pivotal week for global and domestic data.
The Bloomberg AusBond Composite 0+ Yr Index rose 0.13%, reflecting a mild but consistent bid for fixed income assets amid softening inflation signals and cautious global sentiment. Short-term rates were stable, with 3-month and 6-month bank bills holding at 3.73% and 3.77%, suggesting little movement in near-term rate expectations.
The 3-year government bond yield stayed flat at 3.33%, while the 10-year yield eased from 4.26% to 4.25%, a subtle shift that points to growing confidence in a slower rate environment. At the long end, the 30-year yield held near 4.96%, still reflecting some inflation premium and longer-duration risk. Markets remain convinced that the RBA is in easing mode, pricing in roughly 90 basis points of cuts, with the cash rate potentially dropping to 2.85% over the next year.
With the US Fed’s policy decision and Australian labour market data both due this week, traders are in a holding pattern, carefully watching for any signals that could tilt the yield curve or disrupt the current calm. For now, it’s a story of quiet confidence in the bond market; yields are softening, volatility is low, and investors are positioning with patience, waiting for the next macro signal to set the direction
Overview of the US Bond Market
US Treasuries ended the day trading close to unchanged with yields above their session lows, and traders continued to anticipate two rate cuts this year, with the first likely in September. Yields on two-year notes, most sensitive to the Fed’s monetary policy, were ending lower by a basis point at 3.94% after earlier climbing as high as 3.96%. Most others were little changed on the day.
The Fed’s decision to hold rates steady – coupled with Powell’s latest warning on tariffs – underscores the delicate balance facing policymakers guiding the economy toward continued expansion. While officials continued to pencil in two rate cuts in 2025, they downgraded their estimates for growth this year while lifting forecasts for unemployment and inflation. The concern about resurgent inflation was reflected in policymakers’ expectations for the years ahead. Officials now see just one cut each in 2026 and 2027. The Federal Open Market Committee voted unanimously on Wednesday to hold the benchmark federal funds rate in a range of 4.25%-4.5%, as they have since the beginning of the year.
They also released new economic forecasts — their first since President Donald Trump unveiled a sweeping set of tariffs in April — showing they expect weaker growth, higher inflation and higher unemployment this year. Fed officials and economists broadly expect the administration’s expanded use of tariffs to weigh on economic activity and put upward pressure on prices. The rate outlook from officials was in line with investors’ expectations for cuts this year prior to the announcement.
Meanwhile, US employers added jobs at a solid pace last month and the unemployment rate held at 4.2 per cent. Fed officials have pointed to the labour market’s overall stability as an additional reason to take a patient approach toward adjusting interest rates.
