The yield curve halted its flattening trend as yields at the short end fell back more than those at the long end. Short end yields are generally being anchored by domestic concerns (weaker Australian GDP growth assumptions) while longer end yields are being driven by offshore (US) yields, which spike higher on the FOMC rate increase but fell back late in the week.
The 3y/10y bond spread rose by 3bps to 76bps as 3 year yields fell 12 bps and 10 year bond yields fell 9bps. It is still below the 80bps and 90bps in which the 3y/10y bond spread has ranged since mid-August but the latest number is the lowest since the end of April.
(December bond futures expired during the middle of the week and so some spreads are not comparable with those from the previous week as March contracts are now being used.)