FX.co ★ Australia 10-Year Yield Rises for 4th Session

Australia's 10-year government bond yield has climbed to approximately 4.73%, marking its fourth consecutive rise as markets factor in the probability of further interest rate hikes. Recent statistics indicate that household spending remained robust in November, contributing to stronger sales volumes in the final quarter and bolstering economic momentum. This ongoing demand could pose challenges for the Reserve Bank of Australia (RBA), as it may impede efforts to reduce inflation, thereby reinforcing expectations of a tighter monetary policy. This scenario unfolds despite a slowdown in November's inflation rates, which, nonetheless, remain above the central bank's target. RBA Deputy Governor Andrew Hauser recently emphasized that inflation levels are still "too high." Currently, traders are assessing a 30% likelihood of a rate increase in February and anticipate approximately 30 basis points of tightening by 2026, equating to a little over one rate hike. Markets are now turning their attention to next week's December employment report for additional insights into future monetary policy actions.