| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.781 | 3.774 | 0.007 |
| Australian 10-year bond (%) | 4.404 | 3.935 | 0.469 |
| Australian 30-year bond (%) | 4.971 | 4.417 | 0.554 |
| United States 2-year bond (%) | 4.042 | 4.0483 | -0.0063 |
| United States 10-year bond (%) | 4.281 | 4.2985 | -0.0175 |
| United States 30-year bond (%) | 4.579 | 4.5919 | -0.0129 |
LOCAL MARKETS
Australia’s 10-year government bond yield hovered around 4.44% as investors digested hawkish signals from the Reserve Bank of Australia. RBA Assistant Governor Sarah Hunter reiterated Monday that the central bank will take a cautious approach to rate cuts, emphasizing a more conservative stance than market expectations. She also highlighted the need to monitor US policy decisions and their impact on Australian inflation. Her remarks aligned with the central bank’s stance following last month’s hawkish cut and echoed insights from the RBA’s meeting minutes.
Markets now see an 88% chance that policymakers will hold rates at their April meeting. Meanwhile, yields may come under pressure amid concerns about the potential impact of tariffs on global economic growth.
US MARKETS
The yield on the 10-year US Treasury note rose to 4.33% threshold on Tuesday, the highest in three weeks, lifted by strong economic data ahead of tomorrow’s Federal Reserve decision.
Leading indicators on residential construction were above forecasts, and core sectors of retail sales reflected strong private consumption in the upcoming US GDP count.
Additionally, import prices were well ahead of the consensus and consumer inflation expectations measured by the UofM surged to multi-year highs, suggesting that the aggressive set of tariff threats by President Trump may have already impacted spending patterns by households and businesses. The Federal Reserve is set hold its rates unchanged on Wednesday, but the Summary of Economic Projections will show how policymakers weigh pro-inflationary risks against growth-dampening expectations of tariffs announced by the Presidential administration.
Traders are ratcheting back wagers on US interest-rate cuts as they seek clarity from the Federal Reserve amid a thicket of economic and political crosscurrents. Just one week ago, US short-term futures markets reflected expectations for almost three-quarters of a point of rate cuts in 2025, including a reduction as soon as June. Now, in the hours leading up to the Fed’s policy decision and press conference on Wednesday, they are barely pricing in two reductions — and not until the second half of the year.
