Australia bond yield curve flattens as inflation quickens, rate cut bets drop
|Better-than-expected inflation data pushed short-duration government bond yields higher, leading to a flatter yield curve.
At the time of writing, the 2-yr bond yield was up three basis points. Similar gains were seen in 1-yr and 5-yr bond yields. Meanwhile, at the long end of the curve, yields were largely flat to negative.
A flatter yield curve is usually a result of higher short-term inflation expectations/prospects of short-term interest rate rise.
The Q3 inflation data surprised on the higher side, thus reducing the prospects of an interest rate cut in November. The implied probability of RBA rate cut in November fell to 6% from 15% following the CPI release.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.