Consumer Momentum Challenges the RBA Narrative

• US jobless claims surprised on the stronger side at 191k, giving Treasury yields a small nudge higher. Despite some potential distortions to the data around Thanksgiving, markets still feel comfortable about a December Fed cut and a steady easing path.
• Yields in Australia and Japan moved higher as well, with Japan’s 10-year hitting its highest level since 2007 on continued chatter about a possible BoJ hike.
• Local yields jumped up around 5bp. after a much stronger-than-expected 1.3% lift in October household spending — the biggest monthly rise since early 2024 and broad-based across categories and states.
• Markets now price a 0% chance of a cut next week and are fully pricing in a hike by August 2026, keeping pressure on the long end.
• Eyes now turn to Saturday’s US data, UMichigan sentiment survey and the PCE inflation read, which should give a cleaner signal on consumer confidence and underlying price momentum ahead of the FOMC.