Yields Up as the US and UK Reach Trade ‘Deal’

• Overnight, bond markets trimmed rate cut expectations after the US and UK struck a trade ‘deal’ that included sector-specific exemptions for cars, metals, and aerospace parts — though a 10% tariff still applies to most other goods.
• The US 10-year Treasury yield climbed 11bps to 4.38%, supported by strong job data from last week and the prospect of easing trade tensions, with sentiment further lifted by upcoming US-China talks this weekend.
• Still, enthusiasm was tempered — the agreement remains preliminary, with many unresolved issues and limited near-term economic impact, especially as the US already runs a goods trade surplus with the UK.
• Locally, it’s been a quiet week for data. The RBA remains in wait-and-see mode, monitoring global developments ahead of its next meeting on May 20.