Australian 3-Year Bond Yields

Australian bonds have been fairly quiet since April, with a slight downside bias. Over the last few months, the 3s have hovered below 3.5%, but there are no signs of a move down towards 3%. The futures markets are pricing in a 0.25% rate cut come November, and until the RBA takes the next step, it’s hard to imagine the 3s trading lower as they are already well below the Cash Rate.

• We can see the local 3’s trading between 3% and 3.5% into Christmas; the lower they move, the more supportive it is for rate-sensitive stocks.