FX.co ★ Australia 10Y Yield Rises to Over 2-Year High

Australia's 10-year government bond yield has climbed to approximately 4.81%, marking its highest point since October 2023. This spike reflects the heightened market expectations that the Reserve Bank of Australia (RBA) will restart interest rate hikes in the coming year. Markets are now fully pricing in a rate increase during the first half of 2026, with a 72% likelihood of an additional adjustment by the end of the year. This sentiment follows the RBA's recent decision to maintain current rates while indicating a potential shift back to tightening in 2026 if inflation remains persistently high. Several prominent banks have also adjusted their forecasts, suggesting an earlier rate hike next year due to robust growth momentum and enduring inflation, which might necessitate a more extended cycle of tightening. Investors are eagerly anticipating the RBA minutes, scheduled for release on Tuesday, to gain deeper insights into the recent policy decision. It is anticipated that Australia's 10-year bond yield will report an annual increase of roughly 10% in 2025.