FX.co ★ Australia 10-Year Yield Falls After Soft Monthly CPI Data

Australia's 10-year government bond yield settled around 4.14% on Wednesday, marking its lowest point since early May. This decline follows weaker-than-expected monthly consumer price index (CPI) data. In May, Australia's consumer prices increased by 2.1% year-on-year, falling short of market predictions of a 2.3% rise and slowing from April's 2.4% growth. This softer inflation figure, coupled with recent GDP disappointments, bolsters expectations for further interest rate cuts by the Reserve Bank of Australia (RBA). Market analysts are currently predicting an 80% likelihood that the RBA will reduce its cash rate by 25 basis points in July from its current 3.85%, with a total easing of 73 basis points anticipated by the end of the year. Meanwhile, in the United States, Federal Reserve Chair Jerome Powell maintained a cautious tone during his testimony to Congress on Tuesday, affirming that the Fed is not rushing to cut rates. On the geopolitical stage, investors remain attentive to the situation in the Middle East, particularly regarding the tenuous ceasefire between Iran and Israel.