| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.447 | 3.384 | 0.063 |
| Australian 10-year bond (%) | 4.356 | 4.305 | 0.051 |
| Australian 30-year bond (%) | 5.071 | 5.027 | 0.044 |
| United States 2-year bond (%) | 3.889 | 3.853 | 0.036 |
| United States 10-year bond (%) | 4.392 | 4.378 | 0.014 |
| United States 30-year bond (%) | 4.9481 | 4.9512 | -0.0031 |
Overview of the Australian Bond Market
Australian 10-year Treasuries rose for a fourth day as the market absorbed yesterday’s PMI data, with the yield climbing 7 basis points to 4.36%. The 2-year yield surged 8 basis points to 3.42%, reflecting short-term rate sensitivity, while the 5-year yield rose 8 basis points to 3.76%. The 15-year yield increased 5 basis points to 4.72%, supported by a steeper yield curve amid global trade optimism.
Yields have risen over the past month, with the 10-year up 21 basis points, driven by robust PMI figures—composite at 53.6, services at 55.2, and manufacturing at 49.5—indicating a 27-month high in business activity. RBA Governor Michele Bullock’s measured rate-cut approach, suggesting cut at least two more times this year, remains intact, though the back-to-back September cut following an almost 100% probability August cut seems unlikely. The AUD’s 0.33% gain to 0.6624 reflects trade deal hopes, including the US-Japan pact and potential US-EU agreement.
Interest-rate swaps show a slight steepening, with yields reacting to yesterday’s US PMI miss (composite 54.6) and new home sales at 0.627 million, below forecasts. Today’s US durable goods data could shift sentiment, especially with the August 1 tariff deadline nearing. The market remains cautious, balancing domestic strength with global uncertainties.
Overview of the US Bond Market
US Government Bonds dropped for a second day, with 10-year yields rising three basis points to 4.41%. Traders slightly pared bets on US rate cuts, projecting less than two reductions this year.
Donald Trump and Federal Reserve Chairman Jerome Powell traded barbs over the central bank’s renovation project during a tour of the construction site, with the US president also using their interaction to again push for lower interest rates.
Recent US economic data has been mixed. The Labor Department said that initial jobless claims declined last week, continuing to show that layoffs have remained constrained. New home sales struggled to gain pace in June, inching slightly higher albeit below economists’ projections. That added to signs of weakness in the housing market.
Investors are watching the data for signs that the trade war is weakening the U.S. economy and consumers. The European Central Bank held interest rates steady at 2% on Thursday, pausing an aggressive rate-cutting campaign to await more clarity on the fallout from President Trump’s tariffs.
