Traders Bet on RBA Pause With Rise in Curve-Steepening Trades
Weak Australian employment data has spurred curve-steepening trades as traders bet the RBA is nearing the end of its hiking cycle, signaling a potential shift in rate expectations.
Traders are increasing curve-steepening bets on Australian government bonds after a weak employment report reinforced expectations that the Reserve Bank of Australia is approaching the end of its rate-hiking cycle.
The softer-than-expected jobs data has led market participants to price in a higher probability of a pause at the RBA's next meeting. Curve-steepening trades, which involve selling short-dated bonds and buying longer-dated ones, reflect the view that the central bank will soon stop raising rates, allowing the yield curve to normalize from its inverted state. Traders can monitor these shifts in real time on NowPrice's live rates dashboard.
Looking ahead, focus will be on upcoming inflation prints and RBA communications for confirmation of the pivot. Any hawkish surprise could reverse the steepening momentum, while further weak data would solidify the pause narrative. The market is now pricing in a peak cash rate below earlier expectations, with rate cuts potentially on the horizon in 2027.