| Close | Previous Close | Change | |
|---|---|---|---|
| Australian 3-year bond (%) | 3.774 | 3.724 | 0.05 |
| Australian 10-year bond (%) | 4.471 | 4.417 | 0.054 |
| Australian 30-year bond (%) | 5.082 | 5.061 | 0.021 |
| United States 2-year bond (%) | 3.6 | 3.571 | 0.029 |
| United States 10-year bond (%) | 4.133 | 4.112 | 0.021 |
| United States 30-year bond (%) | 4.7468 | 4.7308 | 0.016 |
Overview of the Australian Bond Market
Australian government bond yields edged mixed on November 20, 2025, amid global volatility and equity rebounds, with the 10-year yield up 1 basis point to 4.42% and the 2-year rising 1 bp to 3.65%. The 5-year held flat at 3.90%, while the 15-year added 1 bp to 4.73%, slightly steepening the curve as haven flows eased post-Nvidia relief. Benchmarks showed modest pressure, aligning with ASX’s 1.24% surge, though AI doubts lingered.
Movements reflect macro flux: Q3 wages 0.8% QQ, 3.4% YY matched polls, signaling steady inflation—potentially delaying RBA cuts, with Rate Tracker low for December. November PMIs Friday (manufacturing 51.6 vs 49.7 prior) indicate expansion; services 52.7 vs 52.5—stronger could lift yields via growth optimism. Composite leading index October +0.11% vs -0.03 prior suggests mild improvement.
Globally, US reversal (S&P -1.56%) post-Nvidia underscores AI profitability skepticism, per Miller Tabak’s Matt Maley—questioning capex returns amid circular deals, potentially pressuring credit. Fed split: Barr cautious on cuts with above-2% inflation, Hammack warns of stability risks, Goolsbee uneasy but jobs +119K (beating but stale) and 4.4% unemployment keep ~40% December odds. Minutes detail divides; Morgan Stanley dropped cut call. Swaps <25 bps easing year-end.
Domestically, mining/tech gains tie to Nvidia halo, but gold little changed tempers yields. Bitcoin’s 4.2% drop amplifies risk-off signals. PBoC LPR Thursday unchanged (3%/3.5%) highlights disinflation export risks.
Asset caution: dealers eye steady US auctions amid data catch-up. Oil -0.5% to $59.14 on Ukraine peace hints easing Russian supply curbs—Ziemba notes markets dismissing sanctions via shadows.
October CPI Wednesday core MM 0.3%, YY 3.0%; Philly Fed -1.7; homes 4.1M. Friday’s US jobs, Michigan inflation key—hot could widen spreads, per BNP’s Egelhof/Husby maintaining December cut despite unemployment. Overall, sticky inflation curbs easing, but labor supports—with diversification urged amid AI fog and data gaps.
Overview of the US Bond Market
Treasury yields declined on November 20, 2025, extending gains amid equity routs and AI unwind, with the 10-year yield down 4 basis points to 4.08% and the 2-year falling 5 bps to 3.53%, steepening the 2s-10s curve as haven bids surged. The 30-year dipped little, while 5-year yields slid 3 bps to 3.65%. Benchmarks rallied, contrasting stock plunges, as VIX spiked above 26 and Bitcoin’s drop signaled de-risking—boosting safety demand despite mixed jobs data.
The slide incorporates macro uncertainty: September payrolls +119K (beating polls but with August revision to -4K) and 4.4% unemployment underscore labor fragility, per Raymond James’ Eugenio Aleman—potentially fracturing Fed consensus, yet not derailing ~40% December cut odds per futures. Governor Barr cautioned on further easing with above-target inflation, Cleveland’s Hammack flagged stability risks from labor support, Chicago’s Goolsbee uneasy on cuts amid stalled progress. Minutes revealed divides; Morgan Stanley axed December cut forecast post-jobs, noting resilience. Swaps imply <25 bps easing by year-end, reflecting hawkish lean during shutdown data gaps.
Credit caution mounts: hyperscaler issuance $121B YTD fuels bubble fears, per JPMorgan’s Daniel Pinto—predicting corrections amid unproven AI returns, as Nvidia’s receivables spooked despite beats. Circular financing (e.g., Microsoft/Nvidia’s $15B Anthropic) raises sustainability doubts, potentially widening spreads—Bokeh’s Kimberly Forrest questions payment delays on “flying off shelves” chips. Private credit woes persist, with Gundlach’s warnings echoing.
Positioning: asset managers trimmed longs $23.5M per bp last week, per CFTC—focused on 5s/30s; leveraged cut bond shorts. JPMorgan survey: net longs at two-month lows.
Dealers anticipate steady auctions: 10-year $42B (up $1B), 5-year $70B (up $1B). Oil -0.5% to $59.14, gold little changed amid Ukraine peace hints potentially easing Russian supply curbs—Ziemba notes markets shrugging sanctions for now via shadow channels.
Initial claims fell to 220K, signaling retention despite uncertainty. Wednesday’s CPI core MM 0.3%, YY 3.0%; Philly Fed -1.7; homes 4.1M. Friday’s earnings, Michigan inflation key—hot prints could pressure yields higher, per BNP’s James Egelhof/Andrew Husby maintaining December cut despite unemployment rise. Overall, inflation persistence curbs near-term easing, but labor data supports insurance cuts—with diversification urged amid AI skepticism and data limbo.
