| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.686 | 3.776 | -0.090 |
| Australian 10-year bond (%) | 4.372 | 4.476 | -0.104 |
| Australian 30-year bond (%) | 4.972 | 5.053 | -0.081 |
| United States 2-year bond (%) | 3.887 | 3.910 | -0.023 |
| United States 10-year bond (%) | 4.211 | 4.255 | -0.044 |
| United States 30-year bond (%) | 4.578 | 4.632 | -0.054 |
LOCAL BOND MARKETS
Australia’s 10-year government bond yield fell to around 4.37%, mirroring a global decline driven by risk aversion. Investors remained cautious ahead of looming US reciprocal tariffs this week and its potential impact on the global economy.
Domestically, investors awaited the Reserve Bank of Australia’s policy decision on Tuesday, anticipating that the central bank will keep interest rates unchanged at 4.1%. This comes despite recent data showing that over 50,000 jobs were lost in February, while inflation has eased into the RBA’s 2-3% target range, with the board likely to seek broader economic evidence before considering another rate cut. Both Governor Michele Bullock and Deputy Governor Andrew Hauser reinforced this stance in their public comments following February’s rate reduction.
US BOND MARKETS
The yield on the US 10-year Treasury note fell about 6bps to below 4.2%, nearing a four-week low, as investors sought safety amid escalating trade tensions. Concerns over the trade war’s impact on the global economy persist, with new reciprocal tariffs on US imports, including a 25% levy on autos, set to take effect this week. Uncertainty remains over the scope of the levies, as President Trump has stated they would apply broadly to all countries, while reports suggest he is pushing advisors to adopt a more aggressive trade stance.
Meanwhile, traders brace for key economic data, including the jobs report and ISM PMIs due this week, which will provide further insight into labour market conditions and private sector performance. The Treasury yield remains little changed for March but is down about 30bps for the quarter.
Worth noting that over the quarter bonds and equities were negatively correlated, the first time since the heights of the pandemic. Excluding that brief period, however, bonds and equities were effectively positively correlated for the last 20 years.
