| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.805 | 3.781 | 0.024 |
| Australian 10-year bond (%) | 4.425 | 4.404 | 0.021 |
| Australian 30-year bond (%) | 4.993 | 4.971 | 0.022 |
| United States 2-year bond (%) | 3.961 | 4.042 | -0.081 |
| United States 10-year bond (%) | 4.424 | 4.281 | 0.143 |
| United States 30-year bond (%) | 4.646 | 4.579 | 0.067 |
LOCAL MARKETS
Australia’s 10-year government bond yield hovered around 4.46%, following hawkish signals from the Reserve Bank of Australia. On Tuesday, 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.
Markets currently imply an 88% probability that the RBA will keep rates unchanged at its April meeting. Investors now await the jobs report, set for release on Thursday, which will provide further insights into labour market conditions and could influence the RBA’s future policy decisions.
US MARKETS
The yield on the 10-year US Treasury note fell to below the 4.3% threshold on Wednesday after the Federal Reserve held its interest rates unchanged, as expected, and announced it will slow its balance sheet runoff next month. FOMC forecasts reflected median expectations of two additional rate cuts this year. This was consistent with forecasts of lower GDP growth and a higher unemployment rate, offsetting expectations of higher inflation, likely as an impact of aggressive tariffs by President Trump.
Rate futures were loosely unchanged as markets continued to price two 25bps rate cuts in the second half of the year. In the meantime, bonds were also supported by the Fed’s decision to slow its current quantitative tightening pace amid signs of lower underlying liquidity and risks of a more conservative Treasury with government debt limit issues. The runoff in the Fed’s Treasury holding will slow by $20 billion per month to $5 billion, while MBSs are unchanged.
