AUS 10Y Yield Rises Back Toward 5%

2026-05-08 02:19 By Joshua Ferrer 1 min. read

Australia’s 10-year government bond yield rose toward 5%, moving back to multi-decade highs as renewed clashes between the US and Iran weakened hopes for a near-term peace agreement and reignited inflation concerns.

The latest escalation followed US attempt to exit a conflict now in its third month, while awaiting Iran’s response to its proposal to reopen the Strait of Hormuz, a vital waterway for energy flows.

The near-closure of the strait and the resulting energy price shock have fueled concerns about rising inflation, which could keep interest rates higher for longer.

In Australia, markets are pricing around a 20% chance of another rate hike in June, after 75 bps of tightening over the past three meetings.

The odds rise to about 68% for August, with a rate near 4.6% fully priced in by September.

Meanwhile, rising oil prices has also put pressure on the government to restrain spending in its 2026/27 budget due next week, expected around a narrower AU25 billion deficit (0.8% of GDP).



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AUS 10Y Yield Rises Back Toward 5%
Australia’s 10-year government bond yield rose toward 5%, moving back to multi-decade highs as renewed clashes between the US and Iran weakened hopes for a near-term peace agreement and reignited inflation concerns. The latest escalation followed US attempt to exit a conflict now in its third month, while awaiting Iran’s response to its proposal to reopen the Strait of Hormuz, a vital waterway for energy flows. The near-closure of the strait and the resulting energy price shock have fueled concerns about rising inflation, which could keep interest rates higher for longer. In Australia, markets are pricing around a 20% chance of another rate hike in June, after 75 bps of tightening over the past three meetings. The odds rise to about 68% for August, with a rate near 4.6% fully priced in by September. Meanwhile, rising oil prices has also put pressure on the government to restrain spending in its 2026/27 budget due next week, expected around a narrower AU25 billion deficit (0.8% of GDP).
2026-05-08
Australia 10Y Yield Holds at 2-Week Low
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2026-05-07
Australia 10Y Yield Falls Despite RBA Hike
Australia’s 10-year government bond yield fell below 5%, hitting a two-week low as the Reserve Bank delivered a widely expected 25bp hike to 4.35% while leaving the prospect of further tightening uncertain. In an eight to one vote, the central bank raised the cash rate for a third consecutive meeting, returning it to levels last seen at the peak of the post-pandemic inflation surge, underscoring its focus on bringing inflation back to the 2–3% target. The decision marked a more hawkish stance than the split seen in March, though policymakers signaled that monetary policy is now “well placed to respond to developments,” hinting at a possible pause ahead. Markets now see only a 20% chance of another move in June, while a further increase toward 4.60% by September remains fully priced. Meanwhile, a retreat in global oil prices amid growing optimism about a possible end to the conflict in the Middle East helped ease inflation concerns.
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