FX.co ★ Australia 10-Year Yield Falls After RBA Minutes

Australia’s 10-year government bond yield recently dropped to approximately 4.29%, nearing a two-week low as investors processed the latest minutes from the Reserve Bank of Australia (RBA) meeting. During the July meeting, the board concluded that while more rate cuts would eventually be suitable, the timing and magnitude of these cuts are crucial. Most board members favored waiting for definitive evidence of slowing inflation, suggesting that implementing three rate cuts over four meetings would not align with a prudent and gradual policy approach. Despite this cautious stance, market participants are now anticipating a 91% likelihood of a rate cut at the August meeting, with future projections indicating a potential rate bottom around 3.1% by early next year. This shift is influenced by a jobs report that fell short of expectations, hinting at emerging vulnerabilities in the previously robust labor market. Investors are now eagerly anticipating a speech from Governor Michele Bullock for more clarity on the RBA’s policy trajectory and are also awaiting flash PMI readings later this week for additional insights into the economic momentum.