Australia 10Y Yield Hits 10-Week Low

Australia's 10-year government bond yield held around 5.0%, near its lowest level since late August as global bond markets rallied on increased safe-haven demand following a selloff in technology stocks. Investor concerns mounted after the Democrats’ sweeping victory in the US midterm elections raised fears that tighter regulations could slow AI investment, prompting a rally in US Treasuries that spilled over into the Australian bond market. The decline was reinforced by the Reserve Bank of Australia's November 3 decision, as the 25-basis-point hike to 4.85% was accompanied by a closely divided 6–3 vote and a less hawkish guidance, boosting expectations that rates had peaked. However, Deputy Governor Andrew Hauser warned that eroding confidence in the RBA could make inflation harder and costlier to contain, potentially requiring a more aggressive policy response. Swaps currently imply just a 6% chance of a December hike, while a quarter-point rate cut is fully priced by year-end.

Australia’s 10-year government bond yield fell to around 5.0%, hitting a ten-week low as global equities and bonds rallied, while the Reserve Bank of Australia’s less hawkish policy guidance dampened expectations for further interest rate hikes. Although the central bank raised its cash rate by 25 bps to 4.85% on November 3, the split 6–3 decision, with three policymakers favoring no change, and the removal of explicit language on further tightening pointed to a possible pause in December. Attention now turns to RBA Deputy Governor Andrew Hauser, who is due to speak later today on trust in the transmission of monetary policy and may face questions about the impact of lower oil prices on the policy outlook. Elsewhere, Democratic victories in the US midterm elections, which gave the party control of both chambers of Congress, fueled hopes of progress toward ending the US-Iran conflict. This triggered a sharp decline in oil prices and eased concerns over energy-driven inflation.

Australia’s 10-year government bond yield fell below 5.1%, hitting its lowest level since August after the Reserve Bank of Australia’s split decision and less hawkish-than-expected guidance dampened expectations for further interest rate hikes. As widely expected, the central bank raised its cash rate by 25 bps to 4.85%, marking its fifth increase this year and taking borrowing costs to their highest since December 2008. The decision reflected persistent, broad-based inflation driven by elevated fuel and commodity prices, domestic capacity constraints and AI-related demand for technology goods. However, the hike was largely priced in, while the 6-3 vote, with three policymakers favoring no change, and the removal of explicit language on further increases pointed to a possible pause in December. Meanwhile, Governor Michele Bullock said in a press conference that the RBA would now assess how previous hikes affect the economy, stressing that this did not necessarily signal a pause.