Summary:
Short-term BBSW rates eased slightly across all tenors this week. The 1-month rate declined by 2 basis points to 3.51%, while the 3-month and 6-month rates each fell 1 bp to 3.57% and 3.77% respectively. Over the month, the 1-month rate dropped 3 bps, the 3-month rate rose 1 bp, and the 6-month rate increased 8 bps, indicating a mild steepening bias at the short end. This suggests that while near-term funding costs are softening, expectations for medium-term rates remain slightly elevated.
Swap rates declined sharply across all maturities during the week. The 1-year rate fell 14 bps to 3.34%, while the 3-year and 5-year tenors dropped 19 bps each to 3.35% and 3.72% respectively. Longer-term yields also retreated, with the 10-year down 17 bps to 4.15%, and the 15-year falling 19 bps to 4.35%. Monthly changes were more muted, with most tenors showing slight declines or flat movement.
The curve remains upward-sloping, but the broad-based decline in yields reflects waning inflationary pressures and a possible shift in monetary policy expectations, as markets begin to price in a more accommodative stance from the RBA.
Bank Bill Swap Rates
TERM TO MATURITY CLOSING RATE Δ WEEK Δ MONTH 1 month 3.51 -0.02 -0.03 3 months 3.57 -0.01 0.01 6 months 3.77 -0.01 0.08 SWAP RATES
TERM TO MATURITY CLOSING RATE Δ WEEK Δ MONTH 1 year 3.34 -0.14 0.01 3 years 3.35 -0.19 -0.01 5 years 3.72 -0.19 -0.02 10 years 4.15 -0.17 0 15 years 4.35 -0.19 -0.03
Exhibit 1: Australian 3Y/10Y Bond Yield
