Australia’s 10-year government bond yield eased to around 4.95%, retreating from multi-decade highs as optimism over a potential Middle East peace deal helped temper global inflation concerns, even as a tight domestic labor market kept hawkish expectations in place. The jobless rate held steady at 4.3% in March, while employment rose by 17.9 thousand, driven entirely by full-time jobs, signaling resilient labor demand despite external shocks from the conflict. This followed remarks from Deputy Governor Andrew Hauser, who said inflation is still running above target and that there is limited confidence that current interest rates are sufficiently restrictive. Markets are now pricing in a potential third consecutive rate hike in May, which would lift the cash rate to 4.35%. Meanwhile, the US and Iran are considering extending their two-week ceasefire to allow more time for talks, even as the Strait of Hormuz remains effectively closed under a dual blockade.
