Cautious Tone Prevails as Yields Edge Higher Amid US Data Blackout

• The US dollar and Treasury yields edged higher overnight, while equities slipped in a cautious session amid the ongoing government shutdown and lack of fresh economic data.
• The US 2-year yield rose from 3.58% to 3.60% and the 10-year yield lifted from 4.11% to 4.15%. Markets continue to price a 90% probability of a 25bp Fed cut on 30 October, with roughly four cuts expected over the easing cycle.
• Australian bond yields followed the global tone higher, with 3-year futures up to 3.59% and 10-year yields rising to 4.39%. Market pricing still implies a 40% chance of a 25bp RBA cut on 4 November and just one further move beyond that.
• With the US data blackout extending, sentiment remains tentative and central bankers are taking a cautious stance, with the RBNZ a notable exception after its more decisive tone this week.
• Domestically, attention turns to RBA Governor Bullock’s testimony before the Senate Economics Committee today, while Canada’s employment data could shape expectations for the Bank of Canada’s next policy move.