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Australian Yields Set to Soar Past 5%
2 Feb
Summary
- Australian 10-year yields may briefly exceed 5% in upcoming months.
- Stronger-than-expected December inflation data triggered market shifts.
- Markets price in a high probability of a Reserve Bank of Australia rate hike.
Australian 10-year government bond yields are forecasted to surpass 5% in the near future, with the potential for a fleeting climb above this threshold. This upward adjustment is attributed to a recalibration of the country's interest-rate trajectory. As of 2026-02-02T00:41:43+00:00, the benchmark yield stood at 4.81% at the close of the past week.
This movement followed the release of December inflation data, which proved stronger than anticipated. Consequently, swap markets have priced in a substantial 73% chance of a quarter-point interest rate increase by the Reserve Bank of Australia during its upcoming meeting. Further rate hikes are nearly fully priced in by August.
