FX.co ★ Australia 10-Year Bond Yield Steady

Australia’s 10-year government bond yield steadied around 4.27%, reflecting investor response to recent retail sales data. In June, Australian retail sales increased by 1.2% year-on-year, significantly surpassing the anticipated 0.4% rise and representing the most substantial monthly gain since March 2022. This uptick in sales indicates a rebound in consumer spending and aligns with the Reserve Bank of Australia's (RBA) cautious stance on monetary policy. Despite this encouraging data, it hasn't notably altered market expectations for an upcoming rate cut. Investors still foresee a nearly assured 25-basis-point reduction in August, anticipating rates to bottom out near 3.10% by the end of the year. This sentiment is largely driven by the recent softness in inflation, with underlying figures gradually aligning with the RBA’s 2.5% target. In contrast, the U.S. Federal Reserve has maintained its interest rates following the latest policy meeting, offering no indication of the widely expected rate cut in September.