Markets Overview

  • ASX SPI 200 futures up 0.5% to 8,609.00
  • S&P 500 up 0.6% to 6,763.59
  • Dow Average little changed at 47,891.72
  • Aussie up 0.1% to 0.6614 per US$
  • US 10-year yield fell 3.7bps to 4.1158%
  • Australia 3-year bond yield fell 3.4 bps to 4.09%
  • Australia 10-year bond yield fell 0.5 bps to 4.74%
  • Gold spot down 0.3% to $4,325.12
  • Brent futures little changed at $59.64/bbl

Economic Events

  • 11:30: (AU) Nov. Private Sector Credit YoY, prior 7.3%
  • 11:30: (AU) Nov. Private Sector Credit MoM, est. 0.6%, prior 0.7%

Australia has boosted its forecast for commodity export earnings as gold prices continue their breakneck rally and iron ore holds up despite falling Chinese steel production.

Data showing US inflation cooled at a startling clip last month ignited stock and bond markets, bolstering bulls with prospects for more decisive Federal Reserve rate cuts in 2026.

Despite the numerous caveats surrounding the data impacted by the government shutdown, traders welcomed the slowest increase in consumer prices since early 2021. But that was not all. A solid outlook from giant Micron Technology Inc. underscored the voracious appetite for all things related to artificial intelligence. The S&P 500 rose nearly 1%, halting a four-day slide.

Treasury yields dropped as the consumer price index offered some relief to traders worried about more pronounced inflation that could keep a lid on Fed cuts.

“November’s inflation undershoot has armed Fed doves with strong ammunition,” said Seema Shah at Principal Asset Management. “Distortions can’t be ruled out, but the sharp drop in annual inflation leaves the Fed with little excuse not to respond to rising unemployment.”

Because of the shutdown, the Bureau of Labor Statistics couldn’t collect prices throughout October and started sampling later than usual in November. For policymakers, what the latest CPI means depends on how skeptical they are about its accuracy, said Jim Baird at Plante Moran Financial Advisors.

“On the surface, the news on inflation was good and may help to clear the path for further Fed easing. But enough questions will be raised to keep a January cut from being a slam dunk,” he noted.

For its next policy decision in January, swaps are implying just about 20% odds of a cut. A reduction is fully priced in by mid-2026. Traders are also sticking with their call that the Fed lowers rates twice next year.

The Nasdaq 100 rose 1.5%. Micron soared 10%. In late hours, FedEx Corp. boosted its profit forecast. Nike Inc. posted a surprise jump in sales. The yield on 10-year Treasuries slid four basis points to 4.11%. The dollar wavered.

A busy day for global monetary policy decisions saw German and UK bonds underperforming US peers after the European Central Bank and Bank of England issued hawkish signals on the outlook for their rate paths.