Australian 3-Year Bond Yield

The Australian bond is falling (rates higher) as would be expected when rate hikes are suddenly being priced in after further cuts were expected since the last cut in August – a 180 reversal of sentiment. The 3s are now trading 0.4% above the RBA cash rate which feels about right to us while we wait on future economic data.

• We believe recent inflation prints “moved the goal posts” for the RBA with rotation around 4% now feeling likely, but short-term risks are on the upside for yields.