| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.76 | 3.752 | 0.008 |
| Australian 10-year bond (%) | 4.398 | 4.376 | 0.022 |
| Australian 30-year bond (%) | 4.957 | 4.921 | 0.036 |
| United States 2-year bond (%) | 3.948 | 3.966 | -0.018 |
| United States 10-year bond (%) | 4.252 | 4.241 | 0.011 |
| United States 30-year bond (%) | 4.597 | 4.559 | 0.038 |
LOCAL MARKETS
Australia’s 10-year government bond yield rose to around 4.44%, mirroring an upward shift in U.S. bond yields, as the Federal Reserve indicated no rush to cut interest rates. Domestic yields were also supported by hawkish signals from the Reserve Bank of Australia.
Earlier this week, RBA Assistant Governor Sarah Hunter noted that the central bank remained more cautious than markets about further rate cuts, after its first reduction in over four years last month. She also emphasized the need to monitor U.S. policy decisions and their potential impact on Australian inflation. Market opinions on the timing of the next policy easing remain divided, with some analysts anticipating a move as early as May, while others project a cut in July or August.
US MARKETS
The yield on the 10-year US Treasury note fell to 4.2% on Friday, approaching the lowest in over two weeks as markets continued to assess risks of an economic slowdown and how the Federal Reserve would react. The Fed held its rates unchanged this week but its dot-plot indicated that policymakers still foresee two 25bps rate cuts this year amid lower growth and higher unemployment. As a result, traders began to price in three rate cuts by the Fed this year, up from prior expectations of just two cuts before the decision.
This shift occurred despite projections for higher inflation, although Chairman Powell emphasized that policymakers view the inflationary impact of tariffs as temporary. Bonds were also supported by the Fed slowing its balance sheet runoff to address signs of lower underlying liquidity. The Fed’s Treasury holding will be reduced by $5 billion per month instead of $20 billion, while the $35 billion runoff for MBSs are unchanged.
