AUS 10Y Yield Climbs Back Toward Multi-Year Highs

Australia's 10-year government bond yield held above 5.10%, extending its rally to its highest level in nearly two weeks, tracking a broader selloff in global bond markets. US Treasuries led the move after a hotter-than-anticipated US inflation report and hawkish remarks from Federal Reserve officials boosted expectations for an interest-rate hike of half a percentage point next month. Meanwhile, a series of weak economic surveys pointed to a deteriorating outlook for the Australian economy. Consumer sentiment fell to a four-year low in November, while business conditions remained stuck in negative territory, a level not seen in six years. The reading reinforced expectations that the Reserve Bank of Australia has finished its tightening cycle following five interest rate increases this year that brought the cash rate to an eighteen-year high of 4.85%. Markets now imply an 82% probability that rates have peaked, with a quarter-point rate cut fully priced in by the end of 2027.

Australia's 10-year government bond yield fell below 5%, hitting its lowest level in nearly three months as expectations that the Reserve Bank of Australia has reached the end of its tightening cycle boosted demand for government debt. Last week's 6–3 split decision to raise the cash rate to an 18-year high of 4.85%, coupled with the removal of its tightening bias, reinforced expectations that borrowing costs have peaked. Interest rate swaps now imply an 80% probability that rates have reached their peak, with around 30 basis points of easing priced in by the end of next year. Meanwhile, weaker domestic business and consumer confidence added to concerns about economic growth amid elevated cost pressures and higher interest rates. Westpac's consumer sentiment index fell 2.7% to 78.2 in November, its lowest level in four years, while business confidence dropped to a six-year low in October, according to the NAB business survey.

Australia's 10-year government bond yield held around 5.0%, near its lowest level since late August as global bond markets rallied on increased safe-haven demand following a selloff in technology stocks. Investor concerns mounted after the Democrats’ sweeping victory in the US midterm elections raised fears that tighter regulations could slow AI investment, prompting a rally in US Treasuries that spilled over into the Australian bond market. The decline was reinforced by the Reserve Bank of Australia's November 3 decision, as the quarter-point hike to 4.85% was accompanied by a closely divided 6–3 vote, boosting expectations that rates had peaked. However, top RBA officials continued to flag persistent inflationary pressures. Assistant Governor Sarah Hunter said the AI investment boom could add to near-term inflation. Earlier, Deputy Governor Hauser also warned that weakening public confidence in the RBA's ability to control inflation could require more aggressive rate hikes.