FX.co ★ Australia 10Y Yield Hits Fresh 15-Year Peak

Australia’s 10-year government bond yield climbed toward 5.3%, reaching its highest level since mid-2011 as surging oil prices intensified inflation worries and reinforced expectations of further interest rate increases. Brent crude remained above $100 per barrel after Iran and the US carried out their largest wave of attacks on shipping since the conflict began, raising the risk of deeper disruptions to Gulf energy supplies. This renewed bout of energy-driven inflation pushed global bond yields higher, with US Treasury yields rising to their highest levels since 2023, further pressured by disappointment over a buyback program for longer-dated bonds.

At home, the oil shock has already started to feed through to consumer prices, bolstering expectations of a fourth rate hike this year. Deputy Governor Hauser noted that the central issue at the next policy meeting would be whether to raise interest rates, pointing to stubbornly high inflation and growing upside risks. Markets now assign a 77% probability to a 25-basis-point hike at the RBA’s upcoming meeting this month.