FX.co ★ Aussie 10Y Yield Moves Back Toward 6-Month Low

Australia's 10-year bond yield has declined to approximately 4.12%, approaching a six-month low. This drop is primarily driven by growing expectations of imminent interest rate cuts, which are overshadowing the optimistic sentiment surrounding the newly ratified trade agreement between the United States and Australia. In September, the unemployment rate rose to its highest point since 2021, leading markets to increase the likelihood of a Reserve Bank of Australia (RBA) rate cut to a 70% probability for a 25 basis point reduction, compared to about 40% before last week's data release. Investors are now keenly awaiting upcoming economic indicators that could sway the RBA's policy decision in November. These include this week's preliminary Purchasing Managers' Index (PMI) figures and the crucial third-quarter Consumer Price Index (CPI) report due next week. Meanwhile, market sentiment has improved following a significant diplomatic achievement between U.S. President Donald Trump and Australian Prime Minister Anthony Albanese. The two leaders have signed a strategic minerals agreement, which aims to decrease dependence on China and has the potential to inject billions of dollars into domestic mining projects.