7 July – 11 July 2025

US Treasury yields rose slightly in Friday’s close, with the 10-year note at 4.41% and the 30-year at 4.95%, each up 1 basis point daily. The week saw a modest uptick, with the 2-year yield at 3.88% and the 5-year at 3.97%, reflecting cautious sentiment amid the OBBBA’s fiscal stimulus.

The yield curve steepened, supported by a 65% chance of a September rate cut, with markets pricing two cuts by year-end, driven by the OBBBA’s impact versus trade uncertainties. Treasury Secretary Scott Bessent’s bank capital relief proposal added support. With markets quiet over the weekend, attention shifts to Monday’s reopen, with potential shifts from trade and fiscal developments.

Figure 1: Australian Swap to Bond Spreads

Figure 2: ITRAXX Australia – CDS Index