FX.co ★ Australia 10Y Yield Remains Elevated

Australia’s 10-year government bond yield slipped back below 5%, though it remained close to multi-year highs as investors weighed fresh diplomatic signals between the US and Iran alongside the Reserve Bank of Australia’s latest policy guidance. Speaking at an event in New York, Deputy Governor Andrew Hauser said interest rates would need to rise to a level consistent with returning inflation to the RBA’s 2%-3% target band. At the same time, he stressed that policymakers would have to closely monitor the economic fallout from the conflict involving Iran. Following his remarks, the implied probability of a rate hike next month rose to 72% from 69%, with markets now focused on this week’s key labor market data for additional policy direction. Meanwhile, Australian consumer confidence slumped sharply in April, as surging fuel costs and another rate increase drove the steepest decline since the pandemic. In commodity markets, oil prices fell after US and Iranian officials indicated they were prepared to continue negotiations toward a longer-term ceasefire, even though weekend talks failed to yield an agreement.