AU-US 10-year yield spread hits fresh multi-decade low
|Bond markets are likely convinced that the Reserve Bank of Australia (RBA) would cut interest rates this year.
The spread between the 10-year Australian and US government bond yield dropped to minus 57.3 basis points - the lowest level since 1981. Put simply, the benchmark Australian government bond now yields 57.3 basis points less than its American counterpart. The AUD, therefore, is likely to remain under pressure in the near-term.
The AU-US 10-year yield spread turned negative in February last year.
RBA governor Lowe caught markets off guard earlier this week by retreated from his policy guidance that the next move in interest rates would likely be up. The central bank head stated that the chances of a rate cut are now evenly balanced with a hike. The quarterly statement of monetary policy released earlier today also reiterated that dovish shift and revised lower growth and inflation forecasts.
AU-US 10-year yield spread
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