Australia’s 10-year government bond yield fell below 4.95% on Wednesday, easing from multi-decade highs as oil prices retreated on hopes for a Middle East ceasefire, while domestic inflation data had little impact on the outlook for interest rates. Data showed consumer prices were unchanged in February, easing the annual inflation rate to 3.7% from 3.8% the prior month. Core inflation also came in slightly below expectations at 3.3%, though it remained above the Reserve Bank of Australia’s 2%–3% target range. Markets are pricing in about a 50% chance that the RBA will raise its 4.1% cash rate at the May 5 meeting, with rates potentially reaching as high as 4.75% by year-end. Meanwhile, oil prices declined after reports that the US was pursuing diplomatic efforts to end the war with Iran, including a proposed one-month ceasefire and a 15-point plan to resolve the conflict. However, investor skepticism persisted after Tehran denied engaging in any negotiations with Washington.
