Lates News

Australia's benchmark bond yield is poised to fall below US Treasuries of the same maturity for the first time in more than a year, as expectations diverge over the monetary policy paths of the two countries. With markets increasingly betting that the Reserve Bank of Australia is nearing the end of its rate-hiking cycle while the Federal Reserve still has considerable room to raise rates, some strategists believe Australian government bonds' outperformance relative to US Treasuries could extend through the end of 2026. The yield spread between Australian 10-year government bonds and US 10-year Treasuries has narrowed to about 12 basis points, close to the smallest level since September 2025. Barrenjoey Markets and Westpac expect the two countries' yields to converge in the coming months, and National Australia Bank even believes the spread could turn negative. Kenneth Crompton, head of rate strategy at NAB in Sydney, said: "Our base case is that the spread between Australian and US 10-year government bond yields will turn negative in 2027, but it wouldn't be surprising if it happened now. If, by the end of next year, policy expectations for Australia and the Fed diverge as markedly as we expect, the spread could easily hit negative 20 basis points again."