| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.61 | 3.584 | 0.026 |
| Australian 10-year bond (%) | 4.477 | 4.436 | 0.041 |
| Australian 30-year bond (%) | 5.1 | 5.062 | 0.038 |
| United States 2-year bond (%) | 3.988 | 3.99 | -0.002 |
| United States 10-year bond (%) | 4.451 | 4.459 | -0.008 |
| United States 30-year bond (%) | 4.8989 | 4.901 | -0.0021 |
LOCAL BOND MARKETS
Australia’s 10-year government bond yield climbed above 4.5% on Wednesday, reaching its highest level in more than a month, following stronger-than-expected wage inflation data. Annual pay growth rose to 3.4% in the first quarter from 3.2% in the previous quarter, topping forecasts of 3.2%. The strength of wage growth adds pressure on the Reserve Bank of Australia ahead of its policy meeting next week, casting doubt on the likelihood of a significant 50bps rate cut, which some economists have projected.
Still, investors remain fully priced for a smaller 25bps cut. Domestic yields also received support from improving risk sentiment, as a temporary halt in the trade war between the US and China eased worries of a global recession. Meanwhile, in the US, softer-than-expected consumer inflation data bolstered the case for the Federal Reserve easing.
US BOND MARKETS
Treasury yields climbed on Wednesday, with the two-year note’s yield reaching 4.06%, the highest level since March, as traders reduced expectations of multiple Federal Reserve interest-rate cuts by year-end. The yield increase was driven by factors including a shift in market sentiment, hedging flows, and concerns about potential increases in Treasury debt supply due to proposed US tax legislation.
The bond market is sending a message to the administration about deficits, and interest-rate strategists are recommending positioning for a delay in Fed rate cuts, with some predicting yields have more room to rise. All this – despite a softer-than-expected CPI print for April, as evidence of stockpiling by firms prior to tariffs by the US likely delayed the immediate impact of levies on the price of goods and services for households
