Australia’s 10-year bond yield traded around 4.81%, hovering near a two-year high reached earlier this month, as strong economic data reinforced bets on tighter RBA monetary policy. January’s Flash PMI showed Australia’s private sector expanded to its strongest level in nearly four years, matching peaks seen in August 2025, as growth in both manufacturing and services accelerated. This followed surprisingly strong jobs data, with the unemployment rate falling to a seven-month low of 4.1%, beating forecasts of 4.4%. The data suggest the economy remains on solid footing, supporting expectations of a restrictive central bank stance. Markets are currently pricing in a 60% chance of an interest-rate hike in February, up from 25% earlier this week. Investors are now focused on next week’s December inflation print, a key input for policymakers ahead of the next meeting.
