Australia's 10-year government bond yield climbed to 4.32% after it was announced that the country had avoided being impacted by the latest sequence of US tariff increases. According to Trade Minister Don Farrell, the White House confirmed that no nation holds reciprocal tariffs that are lower than those of Australia, indicating President Donald Trump has kept the 10% baseline tariffs on Australian products unchanged. This development has alleviated investor anxiety about potential trade conflicts with the United States.
From an economic perspective, Australia's producer prices grew by 0.7% in the June quarter, which was below the anticipated 0.9% rise, further supporting arguments for a possible interest rate cut next month. This follows a recent consumer inflation report, which highlighted that underlying inflation is consistently nearing the Reserve Bank of Australia's median target of 2.5%. Currently, markets are heavily betting on a 25 basis points cut in August, with expectations that rates will bottom out at approximately 3.10% by the end of the year.
