Soft ADP Print Strengthens Fed Cut Expectations

• US labour market softness deepened, with ADP private payrolls unexpectedly falling 32k (vs +10k expected). The weaker print reinforced expectations of a December Fed cut, pushing US Treasury yields lower and supporting risk sentiment.
• Markets remain confident ahead of next week’s FOMC, pricing a 90% probability of a 25bp cut and around four cuts across the easing cycle. The US 2yr sits at 3.49% and the 10yr at 4.06%, both modestly lower overnight.
• Australia’s Q3 GDP rose 0.4% q/q, surprising markets and well below the 0.7% consensus, as household consumption cooled sharply.
• Despite the lower-than-expected growth, pockets of strength emerged, with private investment rebounding 2.9%—its fastest pace since early 2021. Australian government bond yields dipped briefly (1yr fell from 3.74% to 3.70%) before rallying to finish at 3.76%. Markets continue to assign a 0% chance of an RBA cut next week.
• Attention today turns to Australia’s October trade balance and household spending data, which will offer further clarity on domestic demand heading into Q4.