| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.375 | 3.438 | -0.063 |
| Australian 10-year bond (%) | 4.285 | 4.337 | -0.052 |
| Australian 30-year bond (%) | 4.95 | 5 | -0.05 |
| United States 2-year bond (%) | 3.806 | 3.816 | -0.01 |
| United States 10-year bond (%) | 4.312 | 4.363 | -0.051 |
| United States 30-year bond (%) | 4.794 | 4.866 | -0.072 |
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 contraction for the 33rd consecutive month, with trade and election-related uncertainties weighing heavily on manufacturing—especially in export-exposed areas. This development have reinforced expectations that the RBA may cut its cash rate by 25bps to 3.85% at its meeting later this month.
Elsewhere, top U.S. and Chinese officials will hold talks in Switzerland later this week, marking the first official public engagement between the world’s two largest economies aimed at resolving a trade war.
US BOND MARKETS
The yield on the 10-year US Treasury note held around 4.31% on Wednesday as investors awaited the Federal Reserve’s policy decision. While the Fed is widely expected to keep interest rates unchanged, markets will be closely watching Chair Jerome Powell’s remarks for signals on the future policy path, particularly amid rising political pressure to lower rates. I haven’t spent less time thinking about a Fed Decision. But will he roll out the ‘T’ word again – transitory? I think it will be retired – think about this – a rewiring of the global trade environment, tax cuts apparently coming down the pipe. Ouch. Operation Get Out of There Fast. Say Nothing, Do Nothing. “Hard data ain’t in yet”.
Traders are betting on a slower pace of interest-rate cuts from the Federal Reserve this year, with economic resilience forcing policymakers to remain on hold for longer before easing more sharply in 2026. Just a day ahead of the US central bank’s latest policy decision, money markets are pricing three quarter-point reductions this year, one less than at the start of April. About a half point of additional cuts are expected next year, the most priced in for 2026 at any point in the current easing cycle.
Traders will be scrutinizing comments by Fed Chair Jerome Powell on Wednesday — when the central bank is expected to keep its benchmark rate steady at 4.25%-4.50% — for clues on whether President Donald Trump’s economic policies are prompting any change in policymakers’ view on the timing for further rate cuts. Prior to the customary, pre-decision blackout period, officials urged patience, particularly with higher US tariffs set to fan near-term inflationary pressures.
Market expectations for a cut at the June policy meeting have also faded since Friday, when employment data came in stronger than economists predicted. Monday’s April ISM services data also hinted at economic strength, adding to pressures for front-end yields which are particularly sensitive to monetary policy.
