| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.789 | 3.72 | 0.07 |
| Australian 10-year bond (%) | 4.412 | 4.28 | 0.13 |
| Australian 30-year bond (%) | 4.97 | 4.85 | 0.12 |
| United States 2-year bond (%) | 4.002 | 4.03 | -0.03 |
| United States 10-year bond (%) | 4.318 | 4.23 | 0.09 |
| United States 30-year bond (%) | 4.617 | 4.51 | 0.11 |
LOCAL MARKETS
Australia’s 10-year government bond yield rose to around 4.52%, hovering at its highest level in two weeks as strong economic data pushed back expectations for interest rate cuts. Data released on Thursday showed Australia’s surplus on trade goods widened more than expected in January, driven by a rise in exports while imports fell.
Earlier this week, a report revealed that the country’s economy expanded 1.3% year-on-year in Q4 of 2024, surpassing forecasts of a 1.2% growth and accelerating for the first time since Q3 of 2023. Also, minutes from the RBA February policy meeting suggested that another interest rate cut is not imminent, with board expressing caution. The central bank indicated that an extended period at the current 4.10% cash rate remains possible if inflation persists.
Meanwhile, RBA Deputy Governor Hauser warned that uncertainty related to U.S. tariffs could prompt businesses and households to delay planning and investment, potentially weighing on economic growth. Anyone else getting the sense that the RBA is just . . . . flying blind. And what do you do when flying blind? You Pause.
USA Markets
The yield on the 10-year US Treasury note was at 4.3% on Thursday, rebounding from the four-month low of 4.16% touched on Monday after the US relieved some of its sweeping tariffs on Canada and Mexico. President Trump opted to exempt automakers from the 25% tariffs on Canadian and Mexican imports for one month, limiting growth concerns from recently imposed restrictions and signalling that the President may continue caving to the market’s reaction to tariffs. Still, restrictions from Canada and Mexico stood and no concessions were made on 20% tariffs on China, holding growth concerns.
Additionally, the latest data pointed to some softening in the labour market. The Challenger, Gray & Christmas report pointed to a surge in job cuts while the ADP report showed an aggressive slowdown in private payrolls. Growth concerns were also stemmed by pledges to balance the budget despite current deficits near the 7% to GDP mark, backing bets of steep spending cuts.
All eyes are now on Friday’s jobs report for further clues on the economy’s trajectory. When does the DOGE start to take effect. . . .?
