Australian 3-Year Bond Yield

Local bond yields spiked higher after the RBA left rates on hold yesterday, but half of the gains were surrendered as traders digested Michele Bullock’s commentary. It was refreshing in one way to see the Australian central bank be independent and not dictated to by financial markets, but we would have preferred a rate cut, though we still expect two before Christmas.

• We continue to look for rate cuts through 20025/6 with the potential for the 3s to test 3% over time.