FX.co ★ Australia 10Y Yield Rises Past 5%

Australia’s 10-year government bond yield remained above 5%, rebounding from a recent ten-week low in line with a broader selloff across global bond markets. The move followed a sharp rise in US Treasury yields, with the US 10-year yield climbing back above 5% after stronger-than-expected US inflation data increased the likelihood of a 50-basis-point Federal Reserve rate hike next month.

At the same time, a run of weak domestic indicators underscored a deteriorating outlook for the Australian economy. Consumer sentiment in November dropped to its lowest level in four years, while business conditions stayed in negative territory, a threshold not breached in six years. These disappointing readings strengthened the view that the Reserve Bank of Australia has concluded its tightening cycle, after delivering five rate hikes this year and lifting the cash rate to an 18-year high of 4.85%.

Market pricing now suggests an 82% probability that interest rates have already peaked, with a 25-basis-point cut fully discounted by the end of 2027.