Australia’s 10-year government bond yield fell below 5.2%, reaching a seven-week low as a tech-led global equity selloff boosted demand for safe-haven assets. Mounting concern over the vast capital needed for AI development and the sustainability of heavy data centre investment has stoked fears that a pullback in spending could drag on economic growth. That backdrop triggered a rally in US Treasuries, which in turn supported Australian bonds.
The move in yields came despite Brent crude pushing above $113 a barrel, renewing worries about inflationary pressures. A senior RBA official cautioned that the inflation outlook remains materially worse, in part due to elevated oil prices, and underscored the importance of keeping inflation expectations anchored ahead of the 3 November meeting, where policymakers will weigh a fifth rate hike this year. Money markets are currently pricing in around a 64% probability of a 25-basis-point increase in November. Investors now look to next week’s Q3 inflation data for clearer signals on the policy path.
