| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.742 | 3.751 | -0.009 |
| Australian 10-year bond (%) | 4.433 | 4.456 | -0.023 |
| Australian 30-year bond (%) | 5.06 | 5.107 | -0.047 |
| United States 2-year bond (%) | 3.495 | 3.522 | -0.027 |
| United States 10-year bond (%) | 4.038 | 4.067 | -0.029 |
| United States 30-year bond (%) | 4.6775 | 4.711 | -0.0335 |
Overview of the Australian Bond Market
Australian government bonds firmed modestly on November 25, 2025, tracking US Treasuries lower amid soft American data boosting global rate-cut expectations. The 10-year yield dipped one basis point to 4.43%, while the two-year rose two to 3.69%, and five-year up two to 3.94%. The 15-year yield fell two to 4.74%, in a slight curve flattening at the long end.
Local sentiment aligns with US weakness: September retail sales there missed at 0.2%, consumer confidence at seven-month low, fueling 80% odds for December Fed cut. This spilled into AUD/USD rallying to 0.6475 before settling +0.11%, pressuring Aussie yields lower as the dollar index dropped 0.45%. Macro blend includes Ukraine-Russia peace hints easing oil to $57.94 (-1.5%), supporting disinflationary views.
No domestic data Tuesday, but Wednesday’s October CPI looms—weighted 3.6% y/y poll, SA MM and YY at 0.3%/3.5% prior. If below forecasts, RBA easing bets could intensify, with markets pricing first cut mid-2026. RBA’s steady 3.60% cash rate contrasts Fed divisions, but global dovishness from weak US payrolls and income growth per JPMorgan may pull yields down.
Positioning cautious: AUD trading near upper Bollinger bands, progress may slow, but USD/CNH drop to 7.0795 aids. Brokers see AUD support at 0.6415, resistance 0.6580.
Upcoming US durable goods, jobless claims Wednesday, and Q3 capex Thursday could sway if confirming slowdown. Local private credit Friday. Tariff talks—US-China truce extension possible per Bessent—add uncertainty, but AI tailwinds and commodity strength (copper +0.91%) bolster economy, tempering bearish bond views. Yields may test lower if CPI soft, but high valuations globally per Goldman suggest diversification.
Overview of the US Bond Market
Bond prices rose on November 25, 2025, with Treasuries rallying as weak economic data revived expectations for a December Federal Reserve rate cut. The 10-year yield declined two basis points to 4.00%, lingering near recent lows, while the 30-year yield rose six basis points to 4.65% in a curve-steepening move. Shorter maturities saw the two-year yield drop two basis points to 3.46%, and the five-year down four to 3.56%. The 2s-10s spread widened 0.8 basis points, reflecting bets on easing amid labor market softening.
Traders ramped up wagers on Fed action following Tuesday’s data dump. September retail sales advanced just 0.2%, undershooting the 0.4% consensus, signaling subdued consumer spending ahead of holidays. Consumer confidence tumbled to 93.4 in November, the sharpest drop in seven months, highlighting job market concerns. ADP private payrolls indicated moderation, aligning with Fed Governor Stephen Miran’s comments on deteriorating employment due to current rate settings. Swap markets now price an 80% chance of a quarter-point cut next month, up from 42% a week ago, as officials appear divided post-September and October reductions.
Macro pressures blend into the outlook, with inflation risks noted by Northern Trust, yet weak data like stagnant income growth per JPMorgan Chase Institute analysis constrains holiday retail power. Ukraine’s support for a Russia peace framework eased geopolitical tensions, contributing to oil’s 1.5% drop to $57.94 a barrel, which in turn supported lower yields. The Bloomberg Dollar Spot Index fell 0.3%, aiding Treasuries as the euro and pound strengthened.
Positioning data shows caution: JPMorgan’s client survey revealed net long positions in Treasuries shrank to two-month lows ahead of the Fed meeting, with fewer longs and more shorts. CFTC figures for the week ended November 22 indicate asset managers trimmed net longs by $23.5 million per basis point, focused on five-year and bond contracts, while leveraged funds reduced shorts in the classic bond. This suggests investors are hedging amid uncertainty over Trump’s Fed pick, with Hassett as front-runner, and ongoing US-China tariff truce talks—Bessent noted a possible 90-day extension.
Dealers expect steady coupon auction sizes for August-October, per Treasury guidance, with 10-year and five-year potentially up $1 billion. Broader resilience in the economy tempers bearish views, but high equity valuations and AI spending raise vulnerability, per Goldman Sachs, with their risk appetite gauge at zero pressuring speculative assets.
Looking ahead, Wednesday’s durable goods (forecast 0.3%) and jobless claims (225k) could sway yields, alongside Thursday’s Q3 GDP preliminary (prior 3%). If data confirms weakness, yields may test lower supports, but tariff clarity and AI tailwinds could sustain higher-for-longer rates, diversifying investor focus beyond US bonds.
