FX.co ★ Australia 10Y Yield Hits 6-Week Low

Australia’s 10-year government bond yield fell below 4.9%, marking a six-week low, as optimism over a potential US–Iran agreement pushed oil prices lower and eased inflation concerns. The proposed deal would reopen the Strait of Hormuz, end hostilities, unlock a portion of Iran’s frozen assets, and establish a framework for further negotiations aimed at curbing Tehran’s nuclear program. However, President Donald Trump stated that the US would maintain its blockade of the Strait of Hormuz until a formal agreement is concluded.

In Australia, expectations of additional monetary tightening by the Reserve Bank diminished following an unexpected rise in unemployment. The jobless rate increased to 4.5% in April from 4.3% in March, the highest level in roughly four and a half years. As a result, the implied probability of a rate hike at the next policy meeting dropped to 3% from 13%, while the market-implied chance of an increase by August was trimmed to 40% from 60%. Investors now turn their attention to key inflation data due this week for further guidance on the interest rate outlook.