FX.co ★ Australia 10-Year Yield Falls from Multi-Week Highs

On Thursday, the yield on Australia's 10-year government bonds decreased to approximately 4.28%, reversing from a peak not seen for over five weeks in the session prior. This decline mirrored trends observed in US bond yields, influenced by the Federal Reserve's June meeting minutes, which revealed that most policymakers anticipated a rate reduction within the year. Domestically, the Reserve Bank of Australia (RBA) opted earlier in the week to maintain its cash rate at 3.85%, contrary to market forecasts that had largely anticipated a 25 basis point cut. Despite its cautious position, the RBA recognized that inflationary risks had become more balanced and signaled a likely wait to adjust rates until after the upcoming second-quarter CPI report, expected at the end of July. In response to the RBA's decision, market sentiment adjusted, now suggesting an 85% likelihood of a rate cut to 3.60% during the central bank's August meeting.