Summary:
Australian Bond Market
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The Aussie yield curve nudged upward across the board, especially at the long end. Rising wage growth—0.8% quarterly and 3.4% annually—suggests inflation pressures remain sticky, even after the RBA cut rates to 3.6%
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Markets had anticipated further easing, but stronger-than-expected wages and subdued employment tempered that outlook/
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That said, CPI inflation is still cooling into the RBA’s 2–3% target zone, reinforcing expectations of only gradual easing in the coming months
US Treasury Market
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Treasury yields across maturities edged higher, driven by a mix of persistent inflation signals and mixed data on growth and activity.
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Despite hopes for rate cuts, moderating—but still elevated—inflation (Core CPI at 3.1% annual and 0.3% monthly) is keeping markets cautious.
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Meanwhile, factors like ongoing debt issuance and geopolitics continue to add volatility and upward pressure on yields.
Figure 1: Australia 3 and 10-year Bond Yield Spread
Figure 2: US 2 and 10-year Bond Spread
To learn more about yield curves and their predictive power, visit this article or this one.