FX.co ★ Australia 10Y Yield Holds Decline

Australia’s 10-year government bond yield remained near 4.9%, consolidating its recent pullback while still trading close to multi-decade highs, as markets monitored developments in the Middle East conflict. Oil prices resumed their rise amid uncertainty surrounding the fragile US–Iran–Israel ceasefire and its impact on energy shipments through the Strait of Hormuz. The truce, which includes Iran’s pledge to reopen this critical shipping route, initially reduced safe-haven demand and pushed yields lower. However, sentiment has turned more cautious as reports suggest that neither side has fully committed to the 10-point agreement, leaving the ceasefire vulnerable to breakdown. Now in its second month, the conflict has driven energy prices higher and intensified inflation risks. The Reserve Bank of Australia has already raised interest rates by 50 basis points to 4.10% in response to persistently elevated inflation, and markets are now pricing in additional tightening in May, with the policy rate expected to reach around 4.61% by year-end.