US Yields Rise Ahead of Payrolls as Australian Trade Data Surprises

• US Treasury yields pushed higher overnight, with the 2-year rising to 3.92% and the 10-year to 4.39%, as markets further pared back Fed easing expectations ahead of tonight’s payrolls. The move continues to keep global bond markets under upward pressure, particularly across longer-duration curves.
• Australia unexpectedly recorded a AUD 1.84bn trade deficit in March versus expectations for a AUD 4.25bn surplus, marking the first deficit since 2017. A sharp rise in imports alongside strong capital goods demand signals resilient domestic activity, which may keep attention on inflation persistence and maintain upward pressure on Australian yields.
• Australian government bond yields tracked offshore moves higher, with 3-years around 4.66% and 10-years back at 5.00%. The continued elevation in outright yields is keeping focus on carry levels across the curve, particularly in high-grade and front-end markets.
• Markets continue to lean hawkish on the RBA outlook, with around an 85% probability of a 25bp hike by August, reinforcing ongoing pricing pressure across TDs, NCDs and floating-rate instruments as front-end rate expectations remain elevated.
• Australian swap rates are expected to open firmer, with 3-year swaps around 4.65% and 10-years near 5.08%, as inflation uncertainty and geopolitical risk continue to drive volatility and maintain sensitivity across curve positioning.