Australian Bond Exchange Weekly Update
19th September 2025
Key Points
- Australia (RBA): Reduced the cash rate by 0.25%, from 3.85% p.a. to 3.60% p.a. July inflation was 2.8% YoY (headline CPI) and 2.7% YoY (trimmed mean)
- United States: The Federal Reserve cut its target cash rate by 0.25% to 4.00%–4.25% p.a. August headline inflation was 2.9% (YoY), up from 2.7% in July. Monthly Producer Price Inflation surprised and dropped by 0.1% (MoM) in August.
- United Kingdom: The Bank of England (BoE) held interest rate steady at 4.00% p.a. The August inflation stood at 3.6%(YOY), down from 3.8% in July.
- Eurozone: The European Central Bank (ECB) has maintained its deposit rate at 2.0% p.a. Inflation in August has increased slightly to 2.1%(YoY) – up from 2.0% in July.
Market Insights
- Unlock Exclusive Investment Opportunities with Fixed Returns in AUD
- RBA Nears Victory Over Inflation.
- US Retail Sales continue to surprise on the upside.
- US Fed as expected cut cash rates by 0.25%
RBA Nears Victory Over Inflation
The Reserve Bank of Australia (RBA) appears to be on the brink of declaring victory over the nation’s most severe inflation surge in decades. According to RBA Chief Economist Sarah Hunter, the central bank is now close to achieving its dual mandate: maintaining price stability while supporting a strong labour market.
Speaking on Tuesday, Hunter said the RBA is working toward a “Goldilocks” scenario – not too hot, not too cold – where inflation remains low and employment stays high. “We had inflation peaking at nearly 8% at the end of 2022, and since then we’ve been focused on bringing it back down, beginning with cash rate hikes more than two years ago,” Hunter said.
US Retail sales continue to surprise to the upside
Retail sales surprised to the upside in August, with the control group rising 0.7% MoM (vs. 0.5% prior), signalling resilient consumer demand despite soft personal income growth over the three months to July.
The annualized 3-month retail sales growth jumped to 8.5%, accelerating from 6.8% in July, marking a notable divergence from personal income (+1.3%) and consumption growth (+3.5%) over the same period to July. This strength points to a material improvement in August activity, supported by household credit resilience and a “wealth effect” among higher-income cohorts with elevated exposure to financial assets.
The US Fed as expected cut the cash rate by 0.25%
Federal Reserve officials lowered their benchmark interest rate by 0.25% and signalled two more reductions this year after months of stability. Chair Jerome Powell pointed to increasing signs of weakness in the labour market to explain why officials decided to cut rates, having held them steady since December amid concerns over tariff-driven inflation. “Labor demand has softened, and the recent pace of job creation appears to be running below the break-even rate needed to hold the unemployment rate constant,” Powell told reporters in his post-meeting press conference.
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|
| Investment | Coupon | Yield To Maturity | Maturity |
|---|---|---|---|
| Commodities Receivables and Finance Trust (CRAFT) Secured Notes (Wholesale Only) | 8.00% | 8.00% | 31 March 2030 |
| Zagga Medium Term Notes | 6.00% | 17.39% | 29 November 2025 |
| Under Armour Inc Bond Linked Security | 6.00% | 6.00% | 18 June 2026 |
| Ford Motor Credit Linked Security | 6.25% | 6.05% | 20 December 2026 |
| Magnetic Rail Group Pty Ltd | 9.25% | 7.50%–8.00% | 27 May 2030 |
| MA Financial Market Linked Security | 8.00% | 6.89% | 31 July 2026 |
| Sydney Airport Senior Secured Capital Indexed Bond | CPI+3.12% | 5.90% | 20 November 2030 |
| Jaguar Land Rover Bond Linked Security | 4.50% | 6.77% | 19 November 2026 |
| Goodyear Tire and Rubber Company Credit Linked Security | 4.50% | 6.66% | 22 March 2027 |
| Rolls Royce Bond Linked Security | 5.50% | 5.50% | 19 February 2026 |
| Jaguar Land Rover Bond Linked Security | 8.00% | 6.31% | 20 December 2026 |
| Xerox Bond Linked Security | 4.50% | 6.81% | 15 August 2028 |
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*Data accurate as at 19.09.2025
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