20.03.202604:04:46UTC+00Australia 10-Year Bond Yield Holds at 5%

Australia’s 10-year government bond yield hovered near 5.0%, its highest level since July 2011, as investors continued to factor in the prospect of further monetary tightening. Data released on Thursday showed that, although the unemployment rate unexpectedly ticked higher in February, it remained relatively low, with the economy creating more jobs than forecast. This underscores a still-tight labor market and supports the Reserve Bank of Australia’s view that the economy is resilient enough to withstand higher interest rates.

Earlier in the week, the RBA lifted its cash rate for a second consecutive meeting, citing stubbornly high inflation, with elevated energy prices linked to the conflict in the Middle East adding to cost pressures. Futures markets now imply a 56% probability of another 25-basis-point increase in May, with an additional 50 basis points of tightening priced in over the remainder of the year. A hike in May would fully unwind last year’s rate cuts.