Australia 10-Year Yield Holds Steady

Australia’s 10-year government bond yield held steady at 4.25% on Thursday, as investors digested a stronger-than-expected trade surplus. Australia’s trade surplus in goods widened sharply to A$5.37 billion in June, from a downwardly revised A$1.6 billion in May and well above market expectations of A$2.5 billion, driven mainly by a rebound in exports (6% vs -3%) while imports declined (-3.1% vs 3.3%). While the trade data points to some resilience in Australia’s external sector, it had little effect on market expectations for monetary policy. Markets remain fully priced for a 25bps rate cut by the Reserve Bank of Australia next week, following a string of weak economic indicators. Earlier this week, data from ANZ and employment platform Indeed showed that job advertisements declined by 1% in July — adding to signs of a cooling labor market. Separate figures also revealed a modest increase in household spending in June, underscoring weak consumer demand.