RBA November rate cut on the table
The overnight market rout sent Australian government bond yields to the lowest in more than a year with the return on policy-sensitive three-year debt down 4 basis points to 3.50 per cent. It has shaved off a whopping 71 basis points since June 27.
Likewise, the yield on the 10-year benchmark dropped 9 basis points yesterday to currently trade at 3.93 per cent. It briefly touched 3.84 per cent, a level last seen in June last year.
Such was the mood that traders have brought forward the timing of the RBA’s first rate reduction and now anticipate a series of rapid cuts. Bond futures are fully priced for a move in November. Importantly, they imply a 50:50 chance of a follow-up Christmas cut.
They expect the cash rate to fall to 3.5 per cent, which would be equivalent to at least three rate cuts of a quarter of a percentage point by July next year.
