Australia 10Y Yield Hits 5-Week Top

Australia’s 10-year government bond yield rose above 4.9%, reaching a five-week high as escalating tensions over the Strait of Hormuz fueled inflation concerns. US President Donald Trump now reinstated a blockade on Iranian vessels transiting the Strait of Hormuz and called on countries benefiting from US efforts to secure the vital shipping route to share the costs. The move followed renewed hostilities between Washington and Tehran, with the US targeting Iran’s maritime capabilities while Tehran retaliated against US allies in the region. In Australia, investors continued to assess the policy outlook with a thin economic calendar this week. Some suspect the Reserve Bank could be done hiking after three rate rises to 4.35%, with a further move this year just seen at around 50%. Upcoming employment and inflation data due later this month will be closely watched for fresh clues on whether underlying price pressures remain strong enough to warrant further monetary tightening.

Australia’s 10-year government bond yield traded above 4.8%, near a four-week high as investors monitored developments surrounding the Strait of Hormuz following renewed tensions in the Middle East. The US launched another wave of strikes on Iran over the weekend in response to an attack on a container ship in the Strait of Hormuz, while Tehran retaliated by targeting US military facilities across the Middle East. The latest escalation drove oil prices higher, stoking inflation fears and raising prospects for interest rate hikes. Meanwhile, RBA Assistant Governor Sarah Hunter said last week that the board will act as needed to return inflation to its target, warning some tightening may be required if the oil shock lifts inflation expectations. Markets currently price around a 60% chance of one more rate hike later this year, though futures imply only 19% odds of an August move. Traders now await key jobs and inflation data due later this month for fresh clues on the policy outlook.

Australia’s 10-year government bond yield traded above 4.8%, hovering near two-week highs as investors assessed major banks’ hawkish interpretations of the Reserve Bank of Australia’s June meeting minutes. Although markets continued to price only a 15% chance of an August rate hike and roughly even odds that the tightening cycle has ended, CBA said the minutes struck a hawkish tone, citing repeated references to excess demand and capacity constraints as evidence that the RBA remains concerned about inflationary pressures. Likewise, ANZ said the minutes reinforced the risk of a further rate increase while maintaining its core rate forecast. Elsewhere, softer-than-expected US jobs data and lower oil prices led traders to scale back expectations for Federal Reserve interest rate hikes. Oil prices also remained lower as recovering energy flows through the Strait of Hormuz helped ease inflationary pressures that had previously bolstered expectations of further rate hikes.