US 10yr back above 5%
- US Treasury yields jumped as markets reopened after the Veterans Day holiday, with the 10yr rising 14bps to 5.13% and the 2yr up 13.5bps to 4.89%. Hawkish Fed commentary drove the move, with Governor Waller raising the prospect of a 50bps hike in December, and markets now pricing a December hike and two further moves next year.
- Brent rose 3% to around US$96/bbl after President Trump said the US does not need a deal with Iran.
- Locally, the RBA faces an increasingly difficult balance, with inflation forecast to remain above 3% until late 2027 while unemployment has climbed to 4.7%, its highest since October 2021. Next week’s Q3 wages and October labour force data will test that tension, with the RBA expecting wages growth to pick up a little in the near term before moderating as the labour market eases.
- Looking ahead: US PPI and further Fed speakers are due tonight, while the RBA minutes and a speech from Governor Bullock on Tuesday will be watched for any signal on the next move.
