| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.381 | 3.375 | 0.006 |
| Australian 10-year bond (%) | 4.253 | 4.285 | -0.032 |
| Australian 30-year bond (%) | 4.908 | 4.95 | -0.042 |
| United States 2-year bond (%) | 3.824 | 3.806 | 0.018 |
| United States 10-year bond (%) | 4.31 | 4.312 | -0.002 |
| United States 30-year bond (%) | 4.8031 | 4.794 | 0.0091 |
LOCAL BOND MARKETS
Australia’s 10-year government bond yield fell slightly to 4.31% as latest data highlighted persistent challenges in the country’s industrial sector. Although the Ai Group Industry Index rose in April, it remained in
Australia’s 10-year government bond yield steadied around 4.28%, following a sharp decline in the previous session after the U.S. Federal Reserve left interest rates unchanged but warned that economic uncertainty has increased further due to President Donald Trump’s trade war.
Meanwhile, on the domestic front, markets continue to price in a 25bps rate cut by the Reserve Bank of Australia at its upcoming meeting on May 20th, amid signs of easing inflation and weaker consumer spending. Investors are also anticipating further cuts in July and August, taking rates to a floor of 3.25%, with some expectations that it could fall to 3.0% or below by year-end. In global developments, President Trump said on Wednesday he would not reduce tariffs on China as a condition to begin trade negotiations. This statement came ahead of a scheduled meeting between senior U.S. and Chinese officials in Switzerland on Saturday to discuss trade matters.
US BOND MARKETS
The yield on the US 10-year Treasury note climbed 8 basis points to 4.35% on Thursday, as investor sentiment improved following the announcement of a US-UK trade deal, viewed as a potential first step toward de-escalating global trade tensions.
Bond traders expect the Fed will lower interest rates three times this year despite the central bank leaving borrowing costs on hold and flagging mounting risks of both higher inflation and unemployment. The world’s most important
central bank has now kept its benchmark at the range of 4.25% to 4.5% for a third straight meeting after cutting it three consecutive times last year.
“It’s not a situation where we can be pre-emptive because we actually don’t know what the right response to the data will be until we see more data,” Powell said. US Treasury yields fell on the news, with the two-year yield easing 3 bps to 3.78%. The 10-year return lost 5bps to 4.28% as the yield curve flattened, suggesting that the Fed is unlikely to lower the cash rate at its next meeting.
