| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.258 | 3.237 | 0.021 |
| Australian 10-year bond (%) | 4.146 | 4.121 | 0.025 |
| Australian 30-year bond (%) | 4.828 | 4.826 | 0.002 |
| United States 2-year bond (%) | 3.75 | 3.771 | -0.021 |
| United States 10-year bond (%) | 4.271 | 4.281 | -0.01 |
| United States 30-year bond (%) | 4.824 | 4.8261 | -0.0021 |
Overview of the Australian Bond Market
Yields of U.S. government bonds fell for the third week in a row, with yields of notes with shorter maturities posting the biggest declines. On Friday afternoon, the yield of the 10-year U.S. Treasury was 4.28%, down from a recent peak of 4.60% on May 21, the 2-year yield ended at 3.3% while the 30-year yield reached 4.85%. Junk bonds extended gains for a fifth week as 10-year Treasury yields fell around 10 basis points.
Money markets continued to project at least two Fed cuts by the end of this year. Wagers on a third reduction could gain momentum with other data released during the week. While a report on Friday showed US consumer sentiment hit a four-month high in June as inflation expectations improved, other data this week painted a less encouraging picture. Purchases of new homes fell in May by the most in almost three years. Recurring applications for unemployment benefits are now at the highest level since 2021, aligning with other data pointing to a slowdown in the labor market. Consumer spending declined in May by the most since the start of the year.
The U.S. economy’s contraction in this year’s first quarter was deeper than initially estimated, based on an updated figure released on Thursday. GDP contracted at a 0.5% annual rate versus an earlier estimate of a 0.2% contraction. It’s the first negative GDP reading since the first quarter of 2022. In contrast, the economy expanded at a 2.4% rate in last year’s fourth quarter.
Those reports were backdrop to testimony this week by Fed Chair Jerome Powell before Congress, where he said interest rates would probably be coming down already if not for uncertainty around Trump’s trade policy. He joined a parade of central bank officials who made clear in speeches they’ll need a few more months to be sure tariff-driven price hikes won’t raise inflation in a persistent way.
U.S. crude oil was trading around $65 per barrel on Friday afternoon, down 11% for the week as tensions in the Middle East eased, calming fears of a potential supply disruption. As recently as June 18, the price had surged above $75 per barrel.
Ahead of a July 9 deadline on reciprocal tariffs, investor sentiment was lifted by updates from the Trump administration on negotiations with China and the European Union. However, the administration on Friday afternoon terminated trade talks with Canada in a dispute over dairy product tariffs and a digital services tax.
Overview of the US Bond Market
On 27 June 2025, the Australian government bond market posted modest gains, reflecting a mix of global uncertainty and domestic economic signals. The Bloomberg AusBond Composite 0+ Yr Index rose 0.16%, indicating a slight uptick in bond prices. The benchmark 10-year bond yields increased to 4.17%, up 4 basis points from the previous session. The 3-year bonds edged up to 3.27%, while 30-year bonds held steady at 4.83%. The short-term 3-month bank bills dropped 15 basis points to 3.73%.
