FX.co ★ Australia 10Y Yield Hits Fresh 15-Year High

Australia’s 10-year government bond yield climbed toward 5.4%, marking a new 15-year high as surging oil prices stoked inflation worries and reinforced expectations of further global monetary tightening. Global bond markets remained under heavy pressure amid escalating tensions in the Middle East, which have intensified fears of disruptions to energy supplies. This oil shock has strengthened expectations of additional RBA tightening, with markets now pricing in an 85% probability of a 25 bp rate increase to 4.60% on September 29. Governor Bullock is due to testify before Parliament and is expected to reiterate that interest rates may need to rise further to bring inflation back under control. At the same time, the US Federal Reserve is also expected to maintain a tighter policy stance this week and may hike again by December, adding further upward pressure on yields. Long-dated yields were additionally lifted by a surge in corporate bond issuance from AI-related companies, which has constrained capital allocation capacity among primary dealers and other financial institutions.