FX.co ★ Australia’s 10-Year Bond Yield Rises

Australia’s 10-year government bond yield edged closer to 4.4% as investors closely evaluated comments made by Reserve Bank of Australia (RBA) Governor Michele Bullock. During her speech in Melbourne, Governor Bullock remarked that it is "too early" to assess the full impact of U.S. President Trump's trade war on future interest rates, and she cast doubt on speculations regarding a potential double rate cut in May. Bullock highlighted that the current market volatility resulting from the trade conflict does not match the severity of the 2008 global financial crisis. Despite this, financial markets are still fully anticipating a 25 basis point rate cut in May, with a segment of investors even considering the possibility of a half-point reduction. This outlook of a more accommodative monetary policy stems largely from the escalating trade tensions between the US and China, which present significant risks to Australia’s export-reliant economy, especially because China is its largest trade partner. Additionally, on the economic data front, Australia’s consumer inflation expectations increased to 4.2% in April, up from 3.6% in March, indicating rising apprehensions that the intensifying trade tensions could drive inflation higher.