FX.co ★ Australia 10-Year Bond Yield Falls to 6-Week Low

On Friday, the yield on Australia’s 10-year government bonds declined to 4.15%, marking its lowest point since May 1. This shift comes as investors have turned towards safer assets in response to Israel's reported airstrikes on Iran. These attacks, allegedly aimed at Iran’s nuclear sites and military facilities, signify a significant rise in tensions between the two nations and have sparked concerns about potential wider conflict in the Middle East. Additionally, domestic bond yields are feeling the pressure from increasing anticipation of monetary policy easing by the Reserve Bank of Australia (RBA). Market participants are currently estimating an 80% probability that the RBA will lower rates by 25 basis points to 3.60% in July, with a further decline to 3.10% anticipated by year-end. This dovish stance is attributed to a series of underwhelming economic reports, including last week’s Q1 GDP data, which fell short of expectations and indicated a slowing economy. In the United States, low inflation figures combined with a rise in weekly jobless claims have heightened the likelihood that the Federal Reserve might recommence rate cuts by September.