| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.273 | 3.238 | 0.035 |
| Australian 10-year bond (%) | 4.152 | 4.123 | 0.029 |
| Australian 30-year bond (%) | 4.836 | 4.81 | 0.026 |
| United States 2-year bond (%) | 3.793 | 3.707 | 0.086 |
| United States 10-year bond (%) | 4.275 | 4.203 | 0.072 |
| United States 30-year bond (%) | 4.8021 | 4.7487 | 0.0534 |
Overview of the Australian Bond Market
Australian government bond yields edged up on Thursday, with the 10-year yield rising 6 basis points to 4.21%, reflecting cautious optimism ahead of the RBA’s July meeting. The 2-year yield increased 6 basis points to 3.29%, while the 15-year yield climbed 6 basis points to 4.55%.
The uptick follows the softer May CPI data, reinforcing expectations of a July rate cut from 3.85% to 3.60%, priced at a 94% probability. Markets anticipate at least four cuts (100 basis points) by mid-2026, with three likely before Christmas. The Australian dollar held at 0.6586 US cents, supported by stable global yields.
Credit spreads tightened further, with 5-year major bank senior spreads at +80 basis points and Tier 2 spreads at +160 basis points, driven by low supply ahead of EOFY.
Overview of the US Bond Market
US Treasury yields ticked higher on Thursday, with the benchmark 10-year note yielding 4.35%, up 11 basis points from Wednesday’s 4.24%. The 30-year bond rose to 4.86%, up 12 basis points, reflecting cautious sentiment amid shifting rate cut expectations.
The yield curve steepened, with the 2-year note at 3.88%, up 7 basis points, and the 5-year at 3.94%, up 8 basis points. The moves followed Federal Reserve Vice Chair Bowman’s comments supporting a potential July rate cut, though Chair Powell’s cautious stance due to tariff inflation risks tempers optimism. Money markets now see a 65% chance of a July cut, with two cuts priced in by year-end.
President Trump’s review of Powell’s successor and Treasury Secretary Bessent’s proposal to ease bank capital requirements, potentially boosting Treasury demand, add uncertainty.
