FX.co ★ Australia 10-Year Yield Edges Higher

Australia’s 10-year government bond yield inched higher to around 4.9%, paring a retreat from a two-week peak, as investors assessed policy signals ahead of next week’s RBA meeting while renewed tensions in the Middle East reignited inflation worries. The conflict intensified after the US launched fresh strikes on Iran, with President Trump accusing Tehran of downing a helicopter in the Strait of Hormuz, further undermining an already fragile ceasefire. This escalation pushed energy prices higher, amplifying inflation concerns and raising the prospect of additional central bank rate hikes. In Australia, attention is firmly on the Reserve Bank’s policy decision next week, where interest rates are widely expected to be left on hold. Governor Bullock reiterated last week that the RBA remains strongly committed to returning inflation to target, following three rate increases earlier this year. At the same time, economists have dialed back expectations for an August move and now anticipate the cash rate will peak at 4.35% by year-end.