US Yields Soar to 2002 Highs as RBA Hikes Rates and Consumer Confidence Plunges

The US 30-year government bond yields reached their highest level since 2002, rising to 5.57%. This increase in yields is due to growing expectations that the Federal Reserve will adopt a more restrictive monetary policy stance at upcoming meetings.

According to the CME FedWatch Tool, market-implied probabilities indicate an increased likelihood of one or two additional benchmark interest rate hikes before the end of 2026. Additionally, sustained high oil prices have further fuelled expectations of tighter monetary policy.

The Reserve Bank of Australia (RBA) raised its benchmark cash rate by 25 basis points to 4.6%, in line with consensus forecasts. This decision marks the highest policy rate since October 2011, underscoring the Australian central bank's commitment to maintaining a restrictive monetary stance amidst persistent inflation.

US consumer confidence fell to its lowest level since 2014, dropping from 88.6 in August to 81.9 in September. The primary headwinds suppressing domestic confidence include high costs for goods and services, particularly fuel, alongside heightened geopolitical and trade anxieties impacting the US economy.