US Treasury yields have climbed to their highest levels in nearly two decades, and on Tuesday the Reserve Bank of Australia lifted the cash rate to 4.60%, its highest setting since November 2011. Bond yields in Australia have followed, and a little further up the curve, corporate bonds are now offering indicative yields of around 7% to 8% p.a. For income investors, the rate cycle has turned the arithmetic back in favour of fixed income for the first time in a generation.
A global repricing in the bond market
Over the past week the US bond market repriced sharply. On Monday 28 September the 10-year Treasury yield touched 5.27%, a 19-year high. On Tuesday the 30-year yield rose above 5.6%, a 24-year high.
Several pressures are converging. Inflation has proved stickier than expected, and the conflict in the Middle East is keeping oil prices elevated. Governments and companies are issuing debt at scale, with the large AI infrastructure builders adding to corporate supply. Markets now expect the Federal Reserve to tighten again.
| Benchmark | Level | Multi-year high |
|---|---|---|
| US 10-year Treasury | 5.27% | 19-year high |
| US 30-year Treasury | 5.61% | 24-year high |
| RBA cash rate | 4.60% | 15-year high |
Intraday highs for US yields, 28 and 29 September 2026.
The RBA follows, and inflation keeps the door open
On Tuesday afternoon the RBA lifted the cash rate by 25 basis points to 4.60%. It is the fourth increase of 2026 and 100 basis points in total. The decision was unanimous, and the Board said it will raise the cash rate again if needed.
This morning’s data supported that stance. The ABS reported annual CPI inflation of 4.0% in the 12 months to August, up from 3.5% in July, with fuel prices rising 14.8% in the month alone. Trimmed mean inflation held at 3.6%, still well above the target band.
Australian bond yields have risen with global markets since early July. As we noted in our August view on the Australian consumer, the RBA has consistently prioritised inflation over growth, and September confirmed it.
Why a rate shock is also an income opportunity
For most of the past 15 years, fixed income paid little. Investors who needed income were pushed up the risk curve into equities, property and credit to find it.
That has changed. Moving a little up the curve, into carefully selected corporate bonds, investors can now access indicative yields of around 7% to 8% p.a. A defensive allocation can once again produce meaningful income without relying on growth assets to do the work. Indicative yields are not guaranteed and vary by issuer, tenor and credit quality.
The distinction that matters is between cash and bonds. A term deposit pays today’s rate, but that rate resets when the cycle turns, and cycles do turn. A fixed-rate bond locks in its yield for its full term. Investors who allocate at current levels keep today’s yields if they hold to maturity, wherever the RBA moves next, provided the issuer meets its obligations.
In my view, the question for most wholesale portfolios is no longer whether bonds deserve a place. It is how much, at what tenor, and with which issuers.
The risks, stated plainly
Yields may rise further. Both the RBA and the Fed have signalled that more tightening is possible, and bond prices fall when yields rise. A bond held to maturity is repaid at par, provided the issuer meets its obligations, but its market value will move before then.
Corporate bonds also carry credit risk, so issuer selection matters as much as yield. Building a position in stages over several months is one way to manage the risk that yields have further to run.
Bonds at Barker Wealth
Barker Wealth gives wholesale investors access to the bond market in three ways:
- Wholesale corporate bonds, selected on issuer quality, tenor and yield
- Primary issuance, with access to new bond deals as they come to market
- Portfolio construction, with bonds as the defensive, income-producing core of a diversified portfolio alongside private credit, structured investments and property
Within our investment range, bonds sit at the lower-risk end of the scale. Read more about how we approach bonds and fixed income.
With yields at their highest in 15 to 20 years, bonds deserve a fresh look in any wholesale portfolio. Book a strategy call at barkerwealth.com.au to discuss where they could fit in yours.
This commentary is intended for general information only and does not constitute personal financial advice. You should consider your own objectives, financial situation and needs before making any investment decisions. This communication is intended for wholesale clients as defined in the Corporations Act 2001 (Cth). Past performance is not a reliable indicator of future performance. Barker Wealth Management Pty Ltd ABN 46 695 875 962, trading as Barker Wealth, holds Australian Financial Services Licence (AFSL) 700297. Your adviser is Joshua Barker (AR 1274752).