CHART OF THE DAY: Australian 10-year bond yields just hit a record low

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In the wake of the rally on US and global bond markets, after Friday night’s weaker than expected print for US second-quarter GDP, Australia’s 10-year government bond rate is currently trading at an all-time low of 1.835%.

ACGB 10 year (

This six-point move in Australian rates has slightly outperformed non-US markets. The ANZ research team said in its morning note today that “US 10-year Treasury yields fell 10bps to 1.45%. Yields in Europe fell too, with 10-year yields in the UK, France, and Germany all down 3bps.”

That, the ANZ said, meant “we would expect regional markets to see lower yields today”.

But the rally in the Australian yield curve may not be done yet.

Australia’s 2-year government bond rate is at an all-time low of 1.474% as traders await what is increasingly becoming an anticipated rate cut by the RBA at 2.30pm Tuesday.

That cut may not be the last, according to Capital Economics, which says in its latest Australia and New Zealand Weekly that “a new era of stubbornly low underlying inflation will prompt policymakers to cut interest rates in Australia from 1.75% now to 1.00% next year”.

If that is the case then Australian bond rates are likely to continue to plumb all-time lows.

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