FX.co ★ Australia 10-Year Yield Edges Lower

Australia's 10-year government bond yield has slightly decreased to approximately 4.31%, influenced by recent economic data that has solidified expectations of a dovish approach from the Reserve Bank of Australia (RBA). The latest statistics indicate that business activity remained flat in May, as consumer caution persisted despite a reduction in interest rates. Consumer confidence saw only a modest uptick, weighed down by growing apprehensions about the economic future. This comes on the heels of a weak GDP report released last week, leading to questions about whether the RBA's policy stance has remained overly tight for an extended period. Current market forecasts suggest a 75% probability of an additional rate cut in July, with an anticipated total reduction of 87 basis points by the middle of next year. Meanwhile, market sentiment has improved, buoyed by optimism regarding the easing of US-China trade tensions. Although no significant resolutions have been reached yet, the positive atmosphere following the initial day of discussions has alleviated some concerns about the potential impact on Australia's export-dependent economy.