| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.759 | 3.755 | 0.004 |
| Australian 10-year bond (%) | 4.43 | 4.411 | 0.019 |
| Australian 30-year bond (%) | 4.991 | 4.988 | 0.003 |
| United States 2-year bond (%) | 4.0174 | 4.037 | -0.020 |
| United States 10-year bond (%) | 4.3172 | 4.331 | -0.014 |
| United States 30-year bond (%) | 4.6627 | 4.656 | 0.007 |
LOCAL BOND MARKETS
Australia’s 10-year government bond yield held around 4.48% as investors awaited the annual budget release ahead of the RBA’s monetary policy meeting next week. Obviously last night we had the federal budget. It has boosted futures as banks and economic analysts concurred that the government’s spending plan will have little impact on monetary easing. ANZ said the budget, which included a surprise $17.1 billion in tax cuts, would not impact its growth, inflation or forecasts for the Reserve Bank of Australia’s interest rate cuts.
Meanwhile, strong economic data has reinforced the case for a restrictive monetary stance from the RBA, aligning with hawkish signals from Assistant Governor Sarah Hunter, who emphasized caution on further rate cuts and the need to monitor US policy for its impact on Australian inflation. Swaps suggest the RBA will likely hold rates in April after February’s first cut in four years, with a 68% chance of a cut in May. Markets expect rates to fall to 3.4% by year-end from 4.1%, implying fewer than three cuts.
US BOND MARKETS
The yield on the US 10-year Treasury note hovered around the 4.3% mark on Tuesday as investors assessed fresh economic data, Federal Reserve commentary, and potential tariff
implications. The latest CB consumer confidence survey showed a continued decline in sentiment for the fourth consecutive month in March, with future expectations plunging to a 12-year low and financial outlooks at their weakest since July 2022.
At the same time, U.S. business activity gained momentum in March, as a strong rebound in services helped offset renewed weakness in manufacturing. Meanwhile, recent remarks from President Trump raised hopes for a more selective tariff approach ahead of the April 2 deadline, but his pledge to tax autos, pharmaceuticals, and other sectors added uncertainty. This complicates the Fed’s outlook, with traders currently pricing in two quarter-point rate cuts this year, in June and September, and growing odds of a third cut in December.
