| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.796 | 3.806 | -0.01 |
| Australian 10-year bond (%) | 4.395 | 4.398 | -0.003 |
| Australian 30-year bond (%) | 4.925 | 4.921 | 0.004 |
| United States 2-year bond (%) | 4.2896 | 4.268 | 0.021 |
| United States 10-year bond (%) | 4.5373 | 4.495 | 0.042 |
| United States 30-year bond (%) | 4.7511 | 4.711 | 0.040 |
* Implied yields from September 2025 futures. As at 11th Feb.
LOCAL MARKETS
Australia’s 10-year government bond yield rose slightly by 1 basis point to 4.46% as investors assessed the latest domestic economic data. But broadly speaking, the domestic market is following U.S. bond market moves more than anything.
The Westpac consumer sentiment survey rose slightly in February (+0.1% to 92.2 vs -0.7% in January (readings below 100 indicate pessimism)) but remained subdued amid concerns over household finances and the rising cost of living. Meanwhile, the NAB business survey revealed sentiment improved in January, hitting its highest level since October, despite struggles with sales and profitability. Both business Confidence and Conditions scores are only marginally above zero (read subdued).
These data reports, the key macro announcements for this week, came ahead of the RBA’s interest rate decision next week, where it is widely expected to deliver its first rate cut in four years, and we believe both data reports only further supports that view.
As previously noted, demand for Australian bond issuance, both government and corporate, remains particularly strong currently, as investors lock in prior to the expected rate cutting cycle and a range of technical and relative value dynamics. Bond Advisor reports all upcoming issuance has been meaningfully oversubscribed.
The yield on the 10-year US Treasury yield extended its increase by 1 basis point 4.54% mark on Tuesday, rebounding from the seven-week low of 4.4% touched on February 5th. The US 2-year gained by a comparable amount to 4.30%.
Key highlights of today’s bond market:
- Chairman Powell reiterated that the Federal Reserve is in no rush to continue lowering interest rates. In a testimony before the Senate Banking Committee, the Chairman noted that the US economy remains strong and the labour market remains robust at a historical level, indicating that the central bank still has leeway to continue tuning policy against inflationary risks.
- Fresh insights on price growth is due tomorrow with the key CPI report, expected to show that headline and core inflation remained relatively unchanged.
