Australian 3-years have been rotating in a tight range through 2024 through both hawkish and dovish economic data and comments, and as we saw through 2022/3, this can continue until Christmas, but ultimately, MM still believes yields/rates go lower, which should provide a tailwind for stocks.
- We believe the local 3’s can test 3% in 2024/5, although such a move is likely to need an economic/central bank catalyst.
MM remains bearish toward Australian bond yields in the medium-term
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US bonds appeared to forget Friday’s PCE print last night, focusing instead on the manufacturing PMI, which increased to 50.3 last month, the highest and first reading above 50 since September 2022, up from 47.8 in February, i.e. the likely trigger for stocks to fall away throughout the session. The US economy remains strong, which could delay the Fed’s timing of rate cuts; at MM, we believe cuts are coming but probably at a slower pace than many expect/hope for.
- We continue to target a move below 3.5% by the US 10s through 2024/5, as they correct the strong advance since mid-2021.
MM is bearish on US 10-year yields medium-term
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