| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.438 | 3.393 | 0.045 |
| Australian 10-year bond (%) | 4.337 | 4.274 | 0.063 |
| Australian 30-year bond (%) | 5 | 4.93 | 0.07 |
| United States 2-year bond (%) | 3.816 | 3.841 | -0.025 |
| United States 10-year bond (%) | 4.363 | 4.343 | 0.02 |
| United States 30-year bond (%) | 4.866 | 4.829 | 0.037 |
LOCAL BOND MARKETS
Australia’s 10-year government bond yield rose to around 4.37%, reaching a more than three-week high after Prime Minister Anthony Albanese secured a second three-year term in the federal elections. Albanese pledged a “disciplined” government focused on addressing cost-of-living issues, global trade tensions, and reaffirmed commitments to renewable energy, tax cuts, housing, and healthcare investments. These policies are seen as potentially increasing inflationary pressures, which could limit the Reserve Bank’s ability to cut rates.
Meanwhile, the Melbourne Institute’s Monthly Inflation Gauge rose 0.6% in April, easing from March’s 0.7% but marking a second consecutive increase. Investors are now looking ahead to the RBA’s May policy meeting, where a 25 bps rate cut to 3.85% is widely expected. Markets are also pricing in a further decline to 2.85% by year-end amid easing inflation and weaker global growth prospects.
US BOND MARKETS
The yield on the 10-year US Treasury note eased to 4.32% on Tuesday, 6bps below the two-week high touched earlier in the session as investors piled on long-dated government debt after a strong auction for the 10-year note. The Fed bought nearly $15 billion in notes in the auction, the most since 2021, to align with the recent softer pace of its quantitative tightening.
The central bank is widely expected to hold its rates unchanged tomorrow, but may unveil insights on the economic impact of President Trump’s trade policies. Trade negotiations between the US and several Asian countries are expected to resume this week, though discussions with China appear to have stalled. On the data front, the ISM services report pointed to an expansion and reinforced optimism from last week’s jobs report. These figures contrasted with signs of economic strain linked to trade tensions, including a Q1 GDP contraction, a spike in imports ahead of new tariffs, and a sharp decline in port volumes.
What’s the Fed doing tomorrow? Nothing and their hands are bound. Milken is on this week. The excitement is about secondaries. I guess we all need liquidity. But get used to secondaries. But on more positive note, ABS.
