Summary: .
For the week ending July 18, 2025, the Australian government bond market recorded steady performance, reflecting domestic economic shifts and global influences, including recent US data. The benchmark 10-year yield held at 4.338%, a slight dip from 4.357% the previous day, while the 2-month BBSW eased to 3.7202% from 3.7175%. The 15-year yield remained stable at 4.68%, and the 5-month BBSW ticked up to 3.74% from 3.765%.
Swap rates showed minor adjustments, with the 3-month BBSW steady at 3.71% and the 6-month up to 3.7637% from 3.8017%, signalling cautious market sentiment. The soft employment data from July 17, with unemployment rising to 4.3% and only 2,000 jobs added, has bolstered a 94% probability of an August rate cut to 3.68%, with expectations of 75-100 basis points of cuts by mid-2026, targeting around 3.02%.
The AU-US 10-year yield spread narrowed to -0.08% from -0.05%, as the US 10-year yield fell to 4.4235% from 4.455%, influenced by softer US import prices and retail sales data. Markets remain attuned to next week’s US housing starts data, expected to shape global yield trends.
Figure 1: Aust. 3 yr minus 10 yr Bond Spread
Figure 2: Australian & US Bond Yields
Figure 3: US 10 yr minus 2 yr Bond Spread
