AUDJPY: 10-Year Bond Yields, Interest Rates, Bank Lending Rates, and Carry Trade Advantage (June 2025)
1. 10-Year Government Bond Yields
Australia (AUD):
The 10-year Australian government bond yield is currently around 4.48%–4.53%.
Japan (JPY):
The 10-year Japanese government bond yield is about 1.48% as of June 16, 2025.
2. Central Bank Interest Rate Decisions
Reserve Bank of Australia (RBA):
The RBA cut its cash rate by 25 basis points to 3.85% in May 2025, citing progress in reducing inflation and global uncertainties.
Bank of Japan (BOJ):
The BOJ held its key short-term policy interest rate steady at 0.5% at its June 2025 meeting, maintaining the highest level since 2008.
3. Bank Lending Rates
Australia:
The average overdraft bank lending rate is 10.51% as of April 2025.
Japan:
The long-term prime bank lending rate is 2.05% (April 2025), while the average commercial bank lending rate is reported at 1.625% as of February 2025.
4. Interest Rate Differential
Policy Rate Differential:3.85%3.85% (RBA) − 0.5%0.5% (BOJ) = 3.35%.
10-Year Bond Yield Differential:4.48%4.48% (Australia) − 1.48%1.48% (Japan) = 3.00%.
5. Carry Trade Advantage
Mechanism:
Investors borrow in the low-yielding Japanese yen (JPY) and invest in higher-yielding Australian dollar (AUD) assets, profiting from the interest rate differential.
Current Advantage:
The wide gap in both policy rates and bond yields makes AUDJPY one of the most attractive carry trade pairs in 2025. The 3.35%–3.00% differential offers steady potential returns, especially in a stable or risk-on market environment.
Risks:
If global risk sentiment deteriorates, the yen can strengthen rapidly as a safe haven, unwinding carry trades.
Sudden shifts in RBA or BOJ policy could narrow the differential and reduce the carry trade's appeal.
6. Summary Table
Factor Australia (AUD) Japan (JPY) Differential / Impact
10Y Bond Yield 4.48–4.53% 1.48% 3.00% (AUD advantage)
Policy Rate 3.85% 0.5% 3.35% (AUD advantage)
Bank Lending Rate 10.51% 1.625–2.05% AUD much higher
Carry Trade Outlook High yield, attractive Low yield, funding Strong incentive for AUDJPY long
Conclusion
The AUDJPY pair is strongly supported by a wide interest rate and bond yield differential, making it a favored target for carry trade strategies in 2025. The RBA’s relatively high rates and the BOJ’s ultra-low rates, combined with stable economic conditions, provide a consistent yield advantage for investors holding long AUDJPY positions. However, traders should monitor global risk sentiment and central bank policy shifts, as these can quickly change the carry trade landscape
1. 10-Year Government Bond Yields
Australia (AUD):
The 10-year Australian government bond yield is currently around 4.48%–4.53%.
Japan (JPY):
The 10-year Japanese government bond yield is about 1.48% as of June 16, 2025.
2. Central Bank Interest Rate Decisions
Reserve Bank of Australia (RBA):
The RBA cut its cash rate by 25 basis points to 3.85% in May 2025, citing progress in reducing inflation and global uncertainties.
Bank of Japan (BOJ):
The BOJ held its key short-term policy interest rate steady at 0.5% at its June 2025 meeting, maintaining the highest level since 2008.
3. Bank Lending Rates
Australia:
The average overdraft bank lending rate is 10.51% as of April 2025.
Japan:
The long-term prime bank lending rate is 2.05% (April 2025), while the average commercial bank lending rate is reported at 1.625% as of February 2025.
4. Interest Rate Differential
Policy Rate Differential:3.85%3.85% (RBA) − 0.5%0.5% (BOJ) = 3.35%.
10-Year Bond Yield Differential:4.48%4.48% (Australia) − 1.48%1.48% (Japan) = 3.00%.
5. Carry Trade Advantage
Mechanism:
Investors borrow in the low-yielding Japanese yen (JPY) and invest in higher-yielding Australian dollar (AUD) assets, profiting from the interest rate differential.
Current Advantage:
The wide gap in both policy rates and bond yields makes AUDJPY one of the most attractive carry trade pairs in 2025. The 3.35%–3.00% differential offers steady potential returns, especially in a stable or risk-on market environment.
Risks:
If global risk sentiment deteriorates, the yen can strengthen rapidly as a safe haven, unwinding carry trades.
Sudden shifts in RBA or BOJ policy could narrow the differential and reduce the carry trade's appeal.
6. Summary Table
Factor Australia (AUD) Japan (JPY) Differential / Impact
10Y Bond Yield 4.48–4.53% 1.48% 3.00% (AUD advantage)
Policy Rate 3.85% 0.5% 3.35% (AUD advantage)
Bank Lending Rate 10.51% 1.625–2.05% AUD much higher
Carry Trade Outlook High yield, attractive Low yield, funding Strong incentive for AUDJPY long
Conclusion
The AUDJPY pair is strongly supported by a wide interest rate and bond yield differential, making it a favored target for carry trade strategies in 2025. The RBA’s relatively high rates and the BOJ’s ultra-low rates, combined with stable economic conditions, provide a consistent yield advantage for investors holding long AUDJPY positions. However, traders should monitor global risk sentiment and central bank policy shifts, as these can quickly change the carry trade landscape
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.