16.12.202503:47:10UTC+00Australia 10Y Bond Yield Rises

The yield on Australia's 10-year government bond has climbed to approximately 4.73%, a level not seen in over two years. This increase is driven by the Reserve Bank's recent hawkish stance. While the central bank held its cash rate steady last week, it signaled the conclusion of its brief easing cycle and suggested the possibility of resuming interest rate hikes in 2026 if inflationary pressures persist. Economists are now predicting at least one rate hike in the coming year, though they caution that stronger economic growth and persistent inflation could lead to a more prolonged tightening period. Additionally, they highlighted that weak productivity has diminished Australia's potential growth rate, heightening the risk of accelerated inflation as economic activity intensifies, consequently maintaining higher borrowing costs compared to previous cycles. The odds of a rate increase in February stand at nearly 30%, with an 80% chance of a hike in May. Investors are now eagerly awaiting the release of next week's Reserve Bank of Australia minutes for more detailed insight into the recent policy decision.