| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.716 | 3.702 | 0.014 |
| Australian 10-year bond (%) | 4.377 | 4.380 | -0.003 |
| Australian 30-year bond (%) | 4.946 | 4.962 | -0.016 |
| United States 2-year bond (%) | 3.842 | 3.883 | -0.041 |
| United States 10-year bond (%) | 4.127 | 4.194 | -0.067 |
| United States 30-year bond (%) | 4.497 | 4.561 | -0.064 |
LOCAL BOND MARKETS
Australia’s 10-year government bond yield rose to around 4.4%, as investors continued to assess the Reserve Bank of Australia’s interest rate outlook. The central bank kept interest rates unchanged on Tuesday, as expected, but expressed caution about whether inflation will continue to moderate. RBA Governor Michele Bullock also advised policymakers to avoid rushing decisions, noting the board did not discuss a rate cut or decide on a May move.
These comments were reflected in market expectations. Following Tuesday’s RBA meeting (or press conference), bond markets dialled back expectations that the RBA will lower the cash rate
in May, now pricing in a 67% chance of a rate cut to 3.85 per cent in May. Still high probability but materially down from 77% before the RBA’s board meeting.
Economic data wise, fresh data showed Australian industrial activity contracted further in March, weighed down by uncertainties surrounding US tariffs and domestic politics.
US BOND MARKETS
The yield on the U.S. 10-year Treasury note fell toward 4.1% on Wednesday, its lowest level since October 18, as traders awaited details of U.S. President Donald Trump’s tariff plans while digesting a stronger-than-expected ADP employment report. Reports indicate that the Trump administration is weighing a broad 20% tariff on most imports, though the exact scale and scope remain uncertain. While the White House has confirmed the tariffs will take effect immediately, it also emphasized that Trump remains open to further negotiations.
Market commentators have generally stated that there are 3 key things: 1) the level, 2) the structure (flat tariff or on specific products), 3) to what degree tariffs are applied to consumer related products, and 4) is there exit strategy on the tariffs. The devil will be in the detail and that may not come from today’s announcement. If so while today’s tariff revelations might offer investors some additional clarity it may not offer anything definitive.
Meanwhile, ADP data showed U.S. private employers added 155,000 jobs in March, surpassing forecasts of 105,000, with both the service and goods-producing sectors posting solid gains. In separate reports released Tuesday, the ISM PMI indicated that U.S. factory activity contracted in March, while job openings declined more than expected in February. Investors now turn their attention to Friday’s nonfarm payrolls report for further clues on Fed’s policy. Given the data collection period, this report will not materially include any DOGE impacts.
