Aussie-US 10-year yield spread drops to 11-week low

A surprisingly soft Australia third quarter inflation reading pushed the spread between the Australia 10-year bond yield and the US 10-year bond yield to 36 basis points; its lowest level since August 8.

The spread stood at 40 basis points ahead of the data release.

Narrowing of the yield differential signals the markets are pushing back the RBA tightening expectations further. The consensus is building in the market that the central bank is likely to maintain a status quo in 2018.