Yields Climb as Fiscal Worries Weigh on Global Bonds

• Overnight, US and UK bond markets traded on negative sentiment. Investors are navigating a crowded backdrop of mixed economic data, tariff concerns, questions over central bank independence, and the broader policy outlook.
• Fiscal worries are adding to the mix, with yields continuing to edge higher. In the US, Treasuries closed 2–3bp higher, led by the long end.
• The UK followed suit, with 30-year gilt yields rising 5bp to 5.7%, their highest level since 1998.
• Closer to home, focus is firmly on today’s Q2 GDP release. Partial indicators have been mixed: net exports are expected to add around 0.1ppt as exports outpaced imports, while public demand fell 0.4% q/q, contributing nothing to growth.
• Consensus is for GDP to rise 0.5% q/q and 1.6% y/y, broadly in line with the RBA’s latest forecasts in its Statement on Monetary Policy.