⚖️🇦🇺🇺🇸 AUD Yield Advantage Erodes Further: Cable FX Macro

• AUD-USD 10-year yield spread started the year at around 10bps in favour of AGBs. The differential had been positive since November and it matched its 2023 highs of about 30bps

• AUD's yield advantage eroded into February and the recent inflation report took USD yields to multi-month highs. AUD-USD 10yr spread reached 14.2bps in favour of the dollar, levels not seen since late October

• Front-end yield spreads moved in tandem, however, these have favoured the dollar since mid-2022. AUD-USD 2yr yield spread now ticks at -74.5bps, this is a 20bps move in favour of the dollar from where it was at the start of the year