Government Bond Auctions Heat Up: Yield Curve Insights for January 2026

By John Baxter, Fixed Income Advisor at LWP Capital

January 2026’s government bond auctions have drawn record bids, pushing yields higher amid fiscal expansion. As fixed income advisor John Baxter at LWP Capital, I see this as a signal for Australian investors to lock in rates.

Market Overview: Auction Results and Yield Movements

The AOFM issued AUD 15 billion in Treasury Bonds, with the 10-year auction yielding 4.75%, oversubscribed by 3x. The yield curve flattened, with 2-year yields at 4.2% and 30-year at 5.2%.

John Baxter from LWP Capital notes semi-government bonds yielded 5.0%, offering value.

Expert Analysis: Fiscal Policy’s Bond Impact

With budget deficits projected, issuance is up to AUD 125 billion. “Higher supply pressures yields, but demand from pensions funds caps rises,” says John Baxter at LWP Capital.

Investment Strategies: Curve Positioning

Buy intermediate maturities for balance. John Baxter at LWP Capital recommends “laddering AGBs for steady income.”

Outlook: Steady Yields Ahead

Yields may peak at 4.8% if hikes materialize. John Baxter from LWP Capital advises, “Act now for long-term gains.” Consult LWP Capital.