Australia money markets convinced of two 25bps rate cuts - Bloomberg

Australia's money markets are convinced that the central bank would cut rates twice in the next 12 months amid worries about an economic slowdown. 

Short-dated bond yields in particular have dropped sharply in the last few days on dovish RBA expectations. For instance, Australia’s 3-year bond yields have dropped almost 50 basis points since early December to within a whisker of the central bank’s 1.5 percent policy rate, according to Bloomberg report. 

Also, the aggregate open interest for Australia’s 3-year bond futures has surged to a record high of 2.3 million contracts.

That said, the demand for short dated bonds may drop somewhat if the labor market report, scheduled for release this Thursday, shows the stellar run of jobs growth continued in February. 

It is worth noting that jobs have remained a bright spot for the economy despite the worsening consumer and business sentiment.