FX.co ★ Australia 10-Year Bond Yield Drops on Haven Demand

Australia's 10-year government bond yield has decreased to approximately 4.29%, marking its lowest point in a month, as investors gravitate towards safe-haven assets. This trend follows U.S. President Donald Trump's announcement of substantial tariff increases, escalating the global trade war and potentially impeding economic growth. Domestically, the Reserve Bank of Australia decided to maintain current interest rates on Tuesday but adopted a slightly dovish stance by eliminating its previous caution regarding additional rate cuts. The central bank recognized that core inflation is subsiding as anticipated, but emphasized the necessity for assurance that this trend would persist. Presently, market analysts estimate about a 70% probability of a 25 basis-point rate cut in May, forecasting a moderately shallow easing cycle reaching 3.35% by the year's end. In related economic developments, Australia's trade surplus significantly reduced in February due to a drop in exports and an increase in imports, suggesting potential challenges for the external sector.