FX.co ★ AUS 10-Year Yield Climbs to Over 1-Year High

Australia's government bond yield increased to 4.66% on Thursday, marking its highest point since November 2024. This rise came as robust economic indicators heightened expectations for a potential interest rate hike next year. In October, household spending surged by 1.3% from the previous month, the most significant increase since January 2024, following a modest rise of 0.3% in September. Simultaneously, the trade surplus expanded more than analysts had anticipated in October, driven by export growth that surpassed imports. Financial markets have subsequently adjusted their expectations, now pricing the likelihood of a rate hike by the Reserve Bank of Australia (RBA) as early as May at 50%. The central bank, which is scheduled to meet next week, is largely expected to maintain the cash rate at 3.6%, following three reductions earlier this year. Despite economic growth figures released on Wednesday falling short of forecasts, they still demonstrated enough underlying resilience to question the necessity for further monetary easing. In addition, RBA Governor Michele Bullock has cautioned that the country's economy is nearing its operational capacity, with policymakers closely monitoring potential inflationary pressures.