Summary:
The Bank Bill Swap Rate (BBSW) market exhibited a notable uptick this week, reflecting a cautious yet responsive stance to the Reserve Bank of Australia (RBA)’s decision to maintain the cash rate at 3.85% and the global fiscal stimulus from the “One Big Beautiful Bill” (OBBBA). For the week ending July 11, 2025, the 1-month BBSW rose 21.75 basis points to 3.7925%, while the 3-month BBSW increased 16.03 basis points to 3.7408%, based on daily data from the Australian Financial Markets Association (AFMA). The 6-month BBSW climbed 6.06 basis points to 3.8301%, indicating a gradual steepening of the short-end yield curve amid tariff uncertainty and the OBBBA’s $3.3 trillion impact.
This upward movement, particularly pronounced on July 10 with a 21.75 basis point jump in the 1-month rate from 3.575% to 3.7925%, aligns with heightened market expectations of future rate adjustments, as noted in swap rate trends reported by Canstar on July 10, 2025. The 1-year swap rate rose 12.05 basis points to 3.3833%, reinforcing a market pricing of a 100-basis point rate cut over the next year, targeting a 2.85% cash rate by mid-2026, though tempered by the RBA’s steady stance. Investors are adopting a wait-and-see approach, with focus shifting to the August 1 tariff deadline and the trading week starting Monday.
Bank Bill Swap Rates
TERM TO MATURITY CLOSING RATE Δ WEEK Δ MONTH 1 month 3.585 0.2075 0.0373 3 months 3.583 0.1578 0.0059 6 months 3.7544 0.0757 -0.0456 SWAP RATES
TERM TO MATURITY CLOSING RATE Δ WEEK Δ MONTH 1 year 3.3833 0.1382 0.0258 3 years 3.3737 0.1387 0.0782 5 years 3.773 0.1405 0.0875 10 years 4.2372 0.1442 0.0939 15 years 4.4813 0.1508 0.1113
Exhibit 1: Australian 3Y/10Y Bond Yield
