Australia 10Y Yield Falls to 7-Week Low
Australia’s 10-year government bond yield fell below 5.2%, hitting a seven-week low as a tech-led global equity selloff sparked demand for safe-haven assets. Concerns over the enormous capital requirements of AI development and the sustainability of heavy data centre investment fueled fears that a slowdown in spending could weigh on economic growth. The concerns triggered a rally in US Treasuries, spilling over into the Australian bond market. The move came despite oil prices surpassing $113 per barrel, threatening renewed inflation pressures. RBA Deputy Governor Andrew Hauser warned that the inflation outlook remained materially worse due partly to elevated oil prices, stressing the need to anchor inflation expectations ahead of the November 3 meeting, where policymakers will consider a fifth rate hike this year. Markets currently imply a 64% chance of a quarter-point rise in November. Focus now turns to Q3 inflation numbers due next week for further clues on the policy outlook.
Australia’s 10-year government bond yield fell below 5.2%, hitting a seven-week low as a tech-led global equity selloff sparked demand for safe-haven assets. Concerns over the enormous capital requirements of AI development and the sustainability of heavy data centre investment fueled fears that a slowdown in spending could weigh on economic growth. The concerns triggered a rally in US Treasuries, spilling over into the Australian bond market. The move came despite oil prices surpassing $113 per barrel, threatening renewed inflation pressures.
RBA Deputy Governor Andrew Hauser warned that the inflation outlook remained materially worse due partly to elevated oil prices, stressing the need to anchor inflation expectations ahead of the November 3 meeting, where policymakers will consider a fifth rate hike this year. Markets currently imply a 64% chance of a quarter-point rise in November. Focus now turns to Q3 inflation numbers due next week for further clues on the policy outlook.