FX.co ★ Australia 10Y Yield Eases to 1-Month Low

Australia’s 10-year government bond yield fell below 4.9%, retreating from multi-year highs to a four-week low, as inflation worries eased following US President Trump’s agreement to a two-week ceasefire with Iran. Less than two hours before a deadline for Iran to reach a deal or face intensified attacks, Trump announced a “double-sided ceasefire” contingent on Tehran reopening the Strait of Hormuz. He noted that the US had received a 10-point proposal from Iran that could serve as a workable basis for negotiations, with the two-week period intended to finalize and implement a broader agreement.

The ceasefire has tempered expectations for additional tightening by the RBA, as lower oil prices may ease near-term inflationary pressures stemming from earlier supply disruptions. Markets had been pricing in a potential rate increase toward 4.35% or higher at the May meeting, partly due to elevated energy costs. However, analysts cautioned that it could take months for supply conditions to fully normalize, even if a durable agreement is ultimately reached.