| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.956 | 3.934 | 0.022 |
| Australian 10-year bond (%) | 4.543 | 4.529 | 0.014 |
| Australian 30-year bond (%) | 5.046 | 5.026 | 0.020 |
| United States 2-year bond (%) | 4.270 | 4.274 | -0.004 |
| United States 10-year bond (%) | 4.507 | 4.535 | -0.028 |
| United States 30-year bond (%) | 4.7477 | 4.764 | -0.016 |
LOCAL MARKETS
Australia’s 10-year government bond yield rose to around 4.58%, reaching its highest level in over a month, as investors digested the Reserve Bank of Australia’s latest policy announcement. As expected, the RBA cut its cash rate by 25 bps, the first reduction since November 2020, citing a significant decline in inflation, alongside weak economic growth and slower-than-expected recovery in private domestic demand. Despite the rate cut, policymakers cautioned that upside risks remain.
Recent labour market data has been unexpectedly strong, suggesting conditions may be tighter than previously thought. While today’s decision reflects progress on inflation, the Board remains cautious about further policy easing, emphasizing that monetary policy remains restrictive even after this adjustment. Meanwhile, in the US, Federal Reserve officials signalled that the central bank should be cautious about resuming interest rate cuts, prioritizing inflation control.
US MARKETS
The yield on the 10-year US Treasury fell to below the 4.55% mark on Wednesday, trimming the sharp rise from the week after the Fed hinted it may slow the runoff of its balance sheet, while markets continued to assess the impact of more aggressive tariff threats from US President Trump. Minutes from the FOMC’s last meeting indicated that various members thought it will be appropriate to pause asset selling until the resolution of debt ceiling dynamics.
The remarks followed earlier hints of more accommodative support in the bond market, including the cut in the reverse repo rate the Fed offers, driving investors toward other risk-free fixed-income assets. Still, policymakers also heeded to higher inflation threats. In the meantime, President Trump announced plans to impose 25% tariffs on autos, semiconductors, and pharmaceutical goods, raising pro-inflationary concerns but hurting the growth outlook.
