Global Bonds Rally on Softer Oil Prices

• Local yields are set to open lower after a sharp rally in global bonds, with Australian 3-year futures yields falling to 4.59% and 10-year yields to 4.93%. RBA pricing remains only modestly tilted toward further tightening following Tuesday’s rate hike, with around 15% priced for June and 65% by August.
• Australia’s March goods trade balance is the main local data point today, with the surplus expected to narrow from $5.7bn to $4.4bn. Barring a large surprise, the domestic rates tone is likely to be driven more by global oil and bond moves than the trade print.
• Global bonds rallied as oil prices fell on reports the US and Iran are moving closer to a memorandum that would gradually reopen the Strait of Hormuz. The move eased near-term inflation fears, with the US 10-year Treasury yield down around 7bps to 4.35% and the 2-year down to 3.87%.
• US ADP payrolls rose 109k in April, the strongest gain since January 2025, pointing to a still-stable labour market rather than a material slowdown, giving the Fed little reason to shift away from its cautious stance.