Australia’s 10-year government bond yield slipped to around 4.95%, pulling back from multi-decade highs as renewed optimism over a possible Middle East peace deal helped ease global inflation concerns. However, a still-tight domestic labor market kept expectations for further monetary tightening intact.
In March, the unemployment rate held at 4.3%, while employment increased by 17.9 thousand, with all of the gains coming from full-time positions. The data point to resilient labor demand despite external shocks stemming from the conflict.
The figures followed comments from Reserve Bank of Australia Deputy Governor Andrew Hauser, who noted that inflation remains above target and that policymakers have limited confidence that current interest rates are sufficiently restrictive. Futures markets are now pricing in the possibility of a third consecutive rate hike in May, which would raise the cash rate to 4.35%.
On the geopolitical front, the US and Iran are weighing an extension of their two-week ceasefire to allow more time for negotiations, even as the Strait of Hormuz remains effectively closed under a dual blockade.