BOND_19.06.25.csv
| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.356 | 3.37 | -0.014 |
| Australian 10-year bond (%) | 4.221 | 4.254 | -0.033 |
| Australian 30-year bond (%) | 4.916 | 4.953 | -0.037 |
| United States 2-year bond (%) | 3.941 | 3.954 | -0.013 |
| United States 10-year bond (%) | 4.395 | 4.405 | -0.01 |
| United States 30-year bond (%) | 4.896 | 4.905 | -0.009 |
Overview of the Australian Bond Market
Australian bond yields drifted lower across the board on Thursday, as investors braced for key economic data and stayed defensive. There’s a growing sense that the market is quietly preparing for an RBA pivot.
The Bloomberg AusBond Composite Index ticked up 0.09%, extending its steady rally this week. It’s a sign of confidence, but not without caution.
The 3-year yield slipped to 3.356%, while the 10-year dropped 3.3 basis points to 4.221%. Even the 30-year yield eased, settling at 4.916%. The whole curve is softening.
Short-term bill rates stayed flat, with 3-month and 6-month holding at 3.75% and 3.79%. No rush at the front end, just patience.
Markets still see the RBA cutting by around 90 basis points, eyeing a 2.85% cash rate within a year. But no one’s making bold moves yet. They’re waiting.
All eyes are now on two things: the Fed’s signals and Australia’s labour force report due Friday. Until then, it’s a market in quiet watch mode – yields easing, nerves steady, and anticipation building.
Overview of the US Bond Market
U.S. equity and bond markets were closed for the Juneteenth holiday, but futures continued to trade. In futures market, the US treasuries were flat.
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.
The Fed’s caution contrasts with central banks in Europe, which have lowered borrowing costs as inflation eases there. Switzerland’s central bank cut interest rates to zero Thursday; some investors are betting it will cut rates into negative territory later this year. That would help to counter the risk of deflation brought on in part by the surging Swiss franc, which makes imports cheaper.
