The Australian sovereign bond market is showing a decrease in demand for the nation's bonds compared to the supply, which is a cause for investor unease about the high level of debt issuance. The spread between 10-year interest-rate swaps and bond futures reached a record low this week, indicating weak demand for bonds relative to swaps. The rise in Australia's 10-year yields to a one-month high is influenced by the Australian Office of Financial Management's plan to issue around A$150 billion ($94.4 billion) of government bonds by June 2026, exceeding the previously projected A$100 billion for the current fiscal year. The increased bond supply is putting pressure on spreads, according to Ken Crompton, the head of rates strategy at National Australia Bank Ltd. Crompton predicts that with the ongoing flows and higher issuance, spreads are likely to stay narrow, and the swap spread curve will stay inverted.