Australia 10Y Yield Stays at 2-Month Low

Australia’s 10-year government bond yield held around 5.1%, remaining near its lowest level since August after the Reserve Bank of Australia’s split decision and less hawkish-than-expected guidance dampened expectations for further interest rate hikes. As widely expected, the central bank raised its cash rate by 25 bps to 4.85%, marking its fifth increase this year and taking borrowing costs to their highest since December 2008. The decision reflected persistent, broad-based inflation driven by elevated fuel and commodity prices, domestic capacity constraints and AI-related demand for technology goods. However, the hike was largely priced in, while the 6-3 vote, with three policymakers favoring no change, and the removal of explicit language on further increases pointed to a possible pause in December. Investors now await Governor Michele Bullock’s press conference in Sydney, where she is expected to provide further clues on the rate outlook.

Australia’s 10-year government bond yield rose above 5.1%, rebounding from a two-month low in the previous session as investors positioned ahead of the Reserve Bank of Australia's monetary policy decision. The RBA is expected to raise its cash rate by 25 bps to 4.85%, its highest level in nearly two decades and marking its fifth rate hike this year. The widely expected decision reinforced policymakers’ focus on bringing inflation under control after the annual inflation rate rose to 3.9% in Q3, well above the RBA’s 2–3% target range, while underlying inflation remained elevated at 3.7%. Meanwhile, Governor Michele Bullock described the labour market as “a little tighter” than the RBA had expected, despite the unemployment rate remaining at a five-year high of 4.7% in September. On the economic front, Australia’s Melbourne Institute Monthly Inflation Gauge increased by 0.5% month-on-month in October 2026, picking up from 0.3% in September and marking its fourth consecutive monthly gain.

Australia's 10-year government bond yield fell to around 5.1%, hitting an eight-week low as global bond markets rallied on increased safe-haven demand following a selloff in technology stocks. Disappointing earnings from major tech companies renewed concerns over the sustainability of heavy artificial intelligence investments, prompting a rally in US Treasuries that spilled over into the Australian bond market. A suspected hack of Binance, the world's largest cryptocurrency exchange, added to broader risk aversion. The decline came despite expectations of further policy tightening by the Reserve Bank of Australia. Hotter-than-expected inflation data and hawkish comments from the RBA’s top officials have led markets to price in an 83% chance of a rate hike at the central bank's November 3 meeting, up from 25% weeks ago. The benchmark yield is now headed for its first monthly decline since June amid souring sentiment around AI-linked equities and the prolonged Middle East tensions.