02.02.202604:59:44UTC+00AUS 10Y Yield Rises Ahead of RBA Decision

Australian 10-year government bond yields have increased to approximately 4.81%, sustaining a level near the highest seen in over two years. This rise is attributed to market anticipation of a rate hike prior to the Reserve Bank of Australia's (RBA) upcoming decision. Traders currently estimate a 75% likelihood of a rate increase on February 3, with an additional hike anticipated by August. This expectation is fueled by a series of robust economic indicators, most notably the higher-than-forecast inflation figures for December, suggesting a prolonged period before inflation targets of 2-3% can be realistically achieved. Additionally, an unexpected decline in unemployment figures bolsters this outlook. The upsurge in Australian job advertisements, an indicator predictive of employment trends, experienced its most rapid increase since February 2022. Furthermore, January's accelerated growth in home prices underscores the economy's strength. Analysts predict that Australian 10-year yields could temporarily surpass the 5% mark as markets adjust their rate expectations, compounded by rising global yields and fiscal concerns adding additional pressure.