| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.925 | 3.899 | 0.026 |
| Australian 10-year bond (%) | 4.615 | 4.562 | 0.053 |
| Australian 30-year bond (%) | 5.183 | 5.129 | 0.054 |
| United States 2-year bond (%) | 3.533 | 3.504 | 0.029 |
| United States 10-year bond (%) | 4.087 | 4.046 | 0.041 |
| United States 30-year bond (%) | 4.7328 | 4.706 | 0.0268 |
Overview of the Australian Bond Market
Australian government bond yields climbed on December 2, 2025, with the 10-year up 10 basis points to 4.61%, reflecting sticky inflation and diminished RBA cut expectations. The 2-year rose 5 bps to 3.85%, 5-year 6 bps to 4.12%, and 15-year 9 bps to 4.89%. This follows October CPI at 3.3%, above target, alongside retreating unemployment and elevated wages, prompting lenders like ANZ to abandon cut forecasts. RBA’s data-dependent stance under Bullock suggests policy pause, with the next move potentially a hike, Deputy Hauser notes policy as marginally restrictive amid neutral rate uncertainties.
Building approvals dropped sharply, but consumer confidence soars and home prices rise, running the economy near speed limit. Q3 GDP tomorrow could reinforce vigilance if strong. Bullock’s “half full” approach means granular focus, avoiding guidance amid cost-of-living scrutiny. Gentle density reforms could add 1M homes, easing shortages per CEDA, modelled on Auckland’s success.
Globally, US yield stability and dollar wavers influence, with AUD/USD up to 0.6552 nearing November highs. Balanced risks cap ranges, but firm yields and Fed bets support. Techs lean bullish, with 55-DMA underpinning. Upcoming S&P Global PMIs (manufacturing final: 51.6, services: 52.7) and goods trade (October exports poll: 7.9%) may sway. Yields’ rise favours commodities over high P/E stocks, as inflation hedges rotate in.
Overview of the US Bond Market
Treasury yields edged higher on December 2, 2025, as bonds stabilized after recent volatility, with the 10-year note little changed at 4.09% amid mixed signals on Fed policy and economic resilience. The 2-year yield dipped to 3.51%, reflecting bets on near-term easing, while the 30-year climbed to 4.75%, steepening the curve slightly. This came as traders digested Trump’s comments on a potential Fed chair announcement in early 2026, with Hassett’s dovish leanings boosting SOFR futures activity and wagers for accelerated cuts post-Powell’s May term end. Delayed November labour data on December 16 could amplify dovish positions if it confirms softening, per Goldman Sachs, favouring curve steepeners like Dec26/Dec27 spreads.
Economic indicators showed US manufacturing PMI weaker than expected at 48.7 in November, pressuring the Fed for action, while consumer confidence rose modestly. Import prices and industrial production data due today (September polls: 0% YY and 0% MM) may provide further clues on inflation and output. The dollar spot index was flat, but regained ground versus the yen to 155.85, recovering from Monday’s low after strong Japanese bond demand. Euro zone inflation ticked to 2.2%, supporting a steady ECB stance, while sterling held firm.
Bond vigilantes like Brandywine’s Jack McIntyre warn of bear steepening if Hassett is confirmed, as cutting rates amid above-target inflation could push long-end yields up. JPMorgan sees limited Treasury outperformance in 2026, with markets overpricing cuts against a bending-but-not-breaking economy. Client surveys indicate shrinking net longs, the smallest in two months, as positions adjust pre-Fed meeting. Asset managers pared longs across tenors by $23.5 million per basis point, while leveraged funds reduced shorts in the classic Bond.
In commodities, oil fell choppily on Russia-Ukraine truce talks involving US envoys, silver retreated from highs, and gold slipped. Crypto’s rebound, with Bitcoin up 0.2% to $91,784, offered some risk-on support, but Strategy Inc.’s $1.4 billion reserve announcement failed to fully soothe Bitcoin-sale fears. Overall, Treasuries are set for their best year since 2020 on Fed bets, but uncertainty around tariffs and data delays keeps yields volatile.
