FX.co ★ AUS 10-Year Yield Near Two-Year High

Australia's 10-year bond yield is hovering around 4.81%, close to a two-year high achieved earlier this month. This rise is driven by robust economic data, which has strengthened expectations of tighter monetary policy from the Reserve Bank of Australia (RBA). January's Flash PMI revealed that Australia's private sector expanded at its fastest pace in nearly four years, equaling the heights last seen in August 2025, with accelerated growth in both manufacturing and services sectors. This expansion follows unexpectedly strong employment figures, with the unemployment rate dropping to a seven-month low of 4.1%, outperforming the forecasted 4.4%. These figures indicate a resilient economy, reinforcing the anticipation of a restrictive stance from the central bank. Currently, markets are factoring in a 60% probability of an interest rate increase in February, up from 25% earlier in the week. Investors are now turning their attention to the forthcoming December inflation report, which will be a crucial consideration for policymakers ahead of their next meeting.