As noted after GDP earlier this week, the Aussie dollar is on hiding to nothing now whenever it rises. Since the GDP release, bond markets have been strongly bid and are raising the prospect of more rate cuts. The long end especially has been hit with the 10 year back to within 2bps of a record low:
That has the Aussie bond curve flattening with the 2/5 now flatter than before the last rate cut and the 2/10 not much better. Compare this to last two sharp steepenings after easing bouts in 2013 and 2015:
The Aussie bond market is warming up for cuts, cuts, cuts. There are also worrying signs in the US bond market where the curve has broken down to a new flattening in recent days as the Fed hawks up:
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