The Australian dollar market is expected to get off to a muted start in 2017, as the latest upturn in US yields is seen denting offshore appetite, while local investors take a pause during the long summer and Christmas holiday period. The spread between 10-year Australian and US government benchmarks shrank to just 23bp on December 15, the day after the US Federal Reserve raised rates. Besides a brief plunge to 16bp in the immediate aftermath of last month's US presidential election, this is the tightest ACGB/Treasury spread since 2001.
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