Australia’s 10-year government bond yield climbed to 4.72%, rebounding from its lowest level in more than a month, after wage data reinforced expectations of further monetary tightening.
The wage price index increased 0.8% in the December quarter, unchanged from the previous period and in line with forecasts. On an annual basis, wage growth edged up to 3.4% from a revised 3.3%, underscoring ongoing labor market tightness and persistent inflationary pressures.
Minutes from the Reserve Bank of Australia’s latest policy meeting indicated that policymakers considered this month’s rate hike necessary, noting that risks around inflation and employment had “shifted materially.” The minutes also highlighted that financial conditions were still not restrictive enough to decisively rein in excess demand.
Market focus now turns to Thursday’s jobs report for further signals on labor market conditions and the likely trajectory of interest rates. Futures pricing suggests traders currently see about a 60% probability of another rate increase in May, with one additional hike fully priced in by August.
