Markets Overview

  • ASX SPI 200 futures down 0.2% to 8,620.00
  • S&P 500 up 0.2% to 6,870.40
  • Dow Average up 0.2% to 47,954.99
  • Aussie up 0.4% to 0.6638 per US$
  • US 10-year yield rose 3.7bps to 4.1351%
  • Australia 3-year bond yield fell 3.7 bps to 4.01%
  • Australia 10-year bond yield fell 1.8 bps to 4.68%
  • Gold spot down 0.2% to $4,197.78
  • Brent futures up 0.8% to $63.75/bbl

Economic Events

  • 11:00: (AU) Australia to Sell A$300 Million 4.930% 2054 Bonds

RBA is poised to keep interest rates unchanged for a third straight meeting this week, with traders and economists on alert for any shift toward a more hawkish tone that might signal the possibility of hikes next year.

Asian markets were poised for a cautious open on Monday as traders navigate deteriorating China-Japan relations, a heavy slate of central bank decisions and the broader outlook for risk assets heading into next year.

The dollar held steady against its major peers, while futures signaled that Australian and Hong Kong equity benchmarks may slip when trading resumes. Japanese shares, meanwhile, were set to edge higher as the yen consolidated Friday’s decline.

The subdued tone reflected increasing investor caution over the durability of the AI-driven rally, with global equities hovering near October’s record highs. Markets were also bracing for policy announcements from central banks spanning Australia to Brazil and the US, just as renewed inflation pressures prompt a swift reassessment of next year’s monetary outlook.

While the Federal Reserve is still likely to cut interest rates on Wednesday, “the rate path for 2026 is more uncertain as members balance lingering price pressures from tariffs, a cooling labor market, the likely pick-up in economic activity in the coming months,” Barclays strategists including Andrea Kiguel wrote in a note to clients. “We think 2026 is likely to be a year of prolonged holds, though markets could try to add hike premiums if inflation momentum persists.”

The S&P 500 Index inched 0.2% higher, but stopped short of records Friday, as a dated reading of the Fed’s preferred inflation gauge met expectations. Treasuries declined, pushing the 10-year yield up four basis points to 4.14% and closing out their worst week since April, after conflicting economic data cast fresh uncertainty on the scale of potential Fed rate cuts next year. The dollar slid 0.5% last week.

Treasury yields may extend their rise, possibly toward 4.5%, on the back of impending fiscal boost from Trump’s earlier spending bills, strong growth and “the broader reflationary momentum now ripping through global long-end bond yields,” Tony Sycamore, an analyst at IG Markets in Sydney wrote in a note. “While we think this is likely more of a story for 2026, a rise of this magnitude could impact equities if it unfolds rapidly.”

This week’s auctions of three-, 10- and 30-year government debt are slated to begin Monday, a day earlier than usual to avoid coinciding with the Dec. 10 Fed announcements. Australia is set to reopen a bond line maturing in 2054 just as the 10-year yield hits the highest since Nov. 2023.

The US continues to clear the data backlog with the delayed JOLTS reports scheduled for release. Weekly jobless claims and the employment cost index are also due. Besides the Fed rate decision, economists expect the Bank of Canada, Swiss National Bank and Reserve Bank of Australia will leave their respective policy rates on hold this week.

In Asia, Japanese assets will be in focus on Monday as relations with Beijing cool further after a Chinese fighter aircraft trained fire-control radar on Japanese military jets for the first time. Wages data for October and third quarter growth data will also be parsed to help gauge the prospect of further Bank of Japan rate hikes next year.

Traders will also be keeping a close eye on Chinese trade data for November to help gauge the health of the economy and the impact from modest US tariff relief. Trade Representative Jamieson Greer at the weekend said China has been complying with the terms of the bilateral trade agreements so far.

Meanwhile, French President Emmanuel Macron warned that the European Union may be forced to take “strong measures” against China, including potential tariffs, if Beijing fails to address its widening trade imbalance with the bloc.

In commodities, oil settled above $60 a barrel on Friday, signaling that a risk premium persists as a peace deal between Russia and Ukraine remains elusive. Gold will be watched after China’s central bank added to its gold reserves for a 13th straight month in November.