FX.co ★ Australis 10Y Yield Nears Fresh 2011 Highs

Australia’s 10-year government bond yield climbed above 5%, nearing new multi-decade highs as global inflation risks intensified amid renewed tensions in the Middle East. The move followed U.S. President Donald Trump’s order for a naval blockade of the Strait of Hormuz after peace talks with Iran over the weekend collapsed, heightening concerns over a prolonged disruption to global energy supplies. The resulting energy shock has strengthened expectations that central banks may delay rate cuts or keep policy restrictive for longer, supporting elevated global yields. In Australia, the repricing is occurring against a backdrop of persistently high inflation and uncertainty over the Reserve Bank’s policy trajectory. Markets currently assign a 65% probability to an RBA rate hike in May and expect the cash rate to be near 4.65% by year-end. Traders are now focused on remarks from RBA Deputy Governor Hauser later today and this week’s labor market data for further signals on the policy outlook.