Australia’s 10-year government bond yield climbed toward 5%, approaching multi-week highs as investors looked ahead to the Reserve Bank of Australia’s policy decision on Tuesday. The central bank is widely expected to leave the cash rate steady at 4.35% for a second consecutive meeting, though officials are likely to retain a hawkish tone amid still-elevated inflation. Markets are currently assigning roughly a 50% chance to an additional 25-basis-point rate increase by year-end, with traders set to scrutinize the RBA’s updated forecasts and comments from Governor Michele Bullock for signals on the future policy trajectory.
At the same time, ongoing uncertainty surrounding efforts to reopen the Strait of Hormuz pushed oil prices higher and reinforced concerns about persistent inflationary pressures. Iran indicated that negotiations with Oman over a shipping corridor through the strait were close to an agreement but emphasized that the key waterway would not reopen immediately. Tehran also ruled out direct talks with the United States for the time being.
