FX.co ★ AUS 10Y Yield Snaps 2-Session Gains

Australia’s 10-year government bond yield eased to around 4.8% on Friday, snapping a two-day advance as investors digested major banks’ hawkish readings of the Reserve Bank of Australia’s June meeting minutes. While markets continued to imply only about a 15% probability of a rate hike in August and were roughly evenly split on whether the tightening cycle has ended, CBA argued the minutes carried a distinctly hawkish tone. The bank pointed to repeated references to excess demand and capacity constraints as signs the RBA remains worried about inflationary pressures. Similarly, ANZ said the minutes underscored the risk of a further rate increase, even as it left its central rate forecast unchanged.

On the data front, Australia’s S&P Global Composite PMI for June was revised up to 50.4 from a preliminary 49.8, reflecting a return to expansion in services activity (50.5 vs 48.7) and a pickup in manufacturing growth (51.5 vs 50.7).