| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.369 | 3.37 | -0.001 |
| Australian 10-year bond (%) | 4.308 | 4.332 | -0.024 |
| Australian 30-year bond (%) | 5.006 | 5.025 | -0.019 |
| United States 2-year bond (%) | 3.867 | 3.85 | 0.017 |
| United States 10-year bond (%) | 4.394 | 4.376 | 0.018 |
| United States 30-year bond (%) | 4.9626 | 4.944 | 0.0186 |
Overview of the Australian Bond Market
Australian 10-year Treasuries rose for a second day as markets digested yesterday’s modest ASX rebound and awaited key data. The 10-year yield fell 4 basis points to 4.28%, the lowest in a week, while the 2-year yield ticked up 1 basis point to 3.33%, reflecting mixed sentiment.
Yields have stabilized recently, with the 10-year holding above its 200-day average amid soft employment data (unemployment at 4.3%) supporting an 85-basis point rate cut expectation over the next year, targeting 3.02% by mid-2026. The August cut to 3.68% remains priced at 94%. The 15-year yield eased 2 basis points to 4.65%, influenced by global caution ahead of US tariff deadlines.
Interest-rate swaps show a steady outlook, with the 5-year rate down 1 basis point to 3.67%, blending domestic easing expectations with global trade uncertainties. Today’s composite leading index and PMI flash data will be pivotal, alongside tonight’s US existing home sales at midnight AEST, which could sway global yields. The AUD weakened 0.18% to 0.6513, reflecting tariff concerns.
Overview of the US Bond Market
US 10-year Treasuries rose for a fifth day as Treasury Secretary Scott Bessent offered support for Federal Reserve Chair Jerome Powell, reassuring investors.
Powell’s future has become a key issue for bond investors as the Fed chief has come under fire from President Donald Trump for holding interest rates steady while waiting to see if trade tariffs impact inflation. Bessent, speaking Tuesday on Fox Business, said if Powell wants, he should stay in the post until his term ends in May.
Yields settled three to four basis points lower across maturities, with the 10-year’s falling to 4.34%, the lowest level since early July.
Yields have come down significantly over the past week. The 10-year’s has moved below its 200 day average and rates on shorter-dated notes — which are more sensitive to changes in monetary policy — have fallen more than 10 basis points.
Interest-rate swaps show a 57% chance the Fed will cut rates at its meeting in September with traders leaning toward two, 25-basis-point reductions by the end of the year.
On the trade front, President Donald Trump unveiled an agreement with the Philippines setting a 19% tariff on the country’s exports. Canada’s prime minister Mark Carney sought to cool expectations about reaching a deal in the next 10 days, but said he’s looking to stabilize the relationship with the US.
Meanwhile, US Treasury Secretary Scott Bessent said he will meet his Chinese counterparts for trade talks in Stockholm next week, and will “be working out what is likely an extension” to the current Aug. 12 deadline for negotiations. He also said that the negotiations with China can now take on a broader array of topics, potentially including Beijing’s continued purchases of “sanctioned” oil from Russia and Iran.
The dollar weakened against its Group of 10 peers with focus on the tenure of Federal Reserve Chair Jerome Powell, while 10-year Treasuries and gold rose as a deadline on US tariffs added to demand for haven assets.
