US yield curve flattens as market fully prices in a US Fed 25bp rate hike in December. The US bond curve is a proxy for the tightness of monetary policy as the Fed is intent on hiking rates in a low inflation environment. Curve flattening coincides with US$ strengthening. One of the reasons why AUDUSD has fallen 1% overnight. There are growing doubts about the US Republicans tax plan. If the tax bill is enacted, it could widen the US deficit and increase public debt by almost $4 trillion over the next decade. Key Australian data this week is tomorrow’s Sep Qtr wage price index and Thursday’s jobs data for October.
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