| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.738 | 3.781 | -0.043 |
| Australian 10-year bond (%) | 4.442 | 4.48 | -0.038 |
| Australian 30-year bond (%) | 5.048 | 5.071 | -0.023 |
| United States 2-year bond (%) | 3.57 | 3.598 | -0.028 |
| United States 10-year bond (%) | 4.104 | 4.127 | -0.023 |
| United States 30-year bond (%) | 4.715 | 4.7279 | -0.0129 |
Overview of the Australian Bond Market
Australian government bond yields dipped on November 18, 2025, tracking Treasury gains amid global risk aversion and equity routs, with the 10-year yield down 4 basis points to 4.44% and the 2-year falling 4 bps to 3.66%. The 5-year slid 4 bps to 3.92%, while the 15-year dropped 2 bps to 4.75%, flattening the curve slightly as haven demand rose. Benchmarks advanced, contrasting ASX’s 1.94% plunge, amid AI skepticism and rate-cut doubts.
The decline blends macro headwinds: RBA minutes Tuesday (11:30 AEDT) may signal cautious easing amid sticky inflation, with Rate Tracker at low December cut odds. Q3 wages Wednesday (QQ 0.8%, YY 3.4%) critical—hotter prints could lift yields via wage-push inflation fears, while softness aids disinflation. Flash PMIs Wednesday (manufacturing 49.7, services 52.5) test growth; contraction signals pressure yields lower.
Globally, US selloff (S&P -0.83%) and Nvidia jitters underscore AI bubble risks, per Carson’s Sonu Varghese—circular deals like Microsoft/Nvidia’s $15 billion Anthropic raise sustainability doubts, potentially stalling credit spreads. Fed divide: Waller’s cut backing vs. hawks like Cleveland’s Hammack prioritizing 2% inflation credibility. Minutes Wednesday detail splits; December odds ~50%, swaps <25 bps easing. Data delays: Thursday’s September jobs (50,000 payrolls, 4.3% unemployment) key—weakness rallies bonds, strength justifies holds amid shutdown gaps.
Domestically, tech wreck (XIJ -6%) and materials slide tie to gold/oil slips, gold -0.72% wait no, +0.6% to $4,071 per articles—haven unwind post-shutdown. Bitcoin below $90,000 amplifies volatility. PBoC LPR Thursday unchanged (3%/3.5%) highlights China disinflation, exporting via cheap goods—Oxford estimates 10% export price drop cuts producer prices.
Asset flows cautious: dealers expect steady US auctions, but local issuance watches wages. Oil +1.3% to $60.71, gold +0.6% temper yield drops. AUD/USD -0.15% to 0.6484 on risk-off.
Tuesday’s leading index (October, -0.03%) precedes wages; soft data could rally bonds. Overall, inflation persistence dominates near-term, but labor weakness may revive cuts—diversification urged amid AI doubts and data fog.
Overview of the US Bond Market
Treasury yields slipped on November 18, 2025, as risk aversion drove haven flows amid equity selloffs and AI valuation fears, with the 10-year yield down 3 basis points to 4.11% and the 30-year little changed at 4.73%. The 2-year fell 4 bps to 3.57%, steepening the 2s-10s curve slightly, as traders pared December cut bets below 50% amid Fed divisions and data delays. Benchmarks advanced, contrasting stock weakness, with Pfizer’s $6 billion sale highlighting issuance resilience despite circular AI deals scrutiny.
The dip ties to broader macro uncertainty: jobless claims at 232,000 (week ended October 18) and ADP’s 2,500 weekly cuts signal labor cooling, potentially tilting toward easing, but persistent inflation above 2%—unchanged yearly—fuels hawkish views. Fed Governor Waller reiterated December cut support on weakening jobs, while Richmond’s Barkin emphasized data needs, noting unclear shutdown impacts. Minutes Wednesday may detail October dissents, with projections showing year-end rate at 3.50%-3.75%. Swaps imply <25 bps easing by December, reflecting hawkish shift during shutdown via reduced cut pricing.
Credit markets show caution: investment-grade spreads at 83 bps, near highs, with 40% order attrition on Monday sales like Amazon’s $15 billion—unusually high amid $121 billion hyperscaler issuance since September, per BofA. Junk yields hit 10.38% (CCC tier), widest in months, as circular AI flows (e.g., Microsoft/Nvidia’s $15 billion Anthropic) raise bubble fears—JPMorgan’s Pinto predicts corrections. Private credit warnings from Gundlach persist, with Blue Owl restricting redemptions. Wellington’s Brij Khurana notes growth signals not in yields, while PineBridge’s Michael Kelly sees little spread value in turbulent tech world.
Positioning data: asset managers trimmed long Treasury futures by $23.5 million per bp last week, per CFTC, focused on 5s/30s; leveraged funds cut shorts in bonds. JPMorgan survey shows net longs at two-month lows.
Dealers expect steady August-October auctions: 10-year $42 billion (up $1B), 5-year $70 billion (up $1B). Oil rose 1.3% to $60.71, gold +0.6% to $4,071, pressuring yields. Bitcoin below $90,000 briefly underscores risk-off. Tuesday’s durable goods (0.2%) and TIC flows precede Wednesday’s CPI (core MM 0.3%, YY 3.0%)—hot prints could widen spreads, per GSAM’s Lindsay Rosner. Thursday’s jobs (50,000 payrolls) key: weakness rallies bonds, strength hits amid Fed split. Overall, while inflation hawks dominate near-term, labor data could revive cuts, with diversification urged amid AI skepticism and shutdown gaps.
