Australia’s 10-year government bond yield fell to below 4.9%, hitting a six-week low as optimism over a potential US-Iran deal lowered oil prices and tempered inflation concerns. The proposed agreement would reopen the Strait of Hormuz, end hostilities, release some frozen Iranian assets, and lay the groundwork for additional negotiations aimed at restricting Tehran’s nuclear program. However, President Donald Trump said the US would keep its blockade of the Strait of Hormuz in place until a formal agreement is finalized. In Australia, expectations of further monetary tightening by the Reserve Bank weakened after a surprise rise in the jobless rate. The unemployment rate unexpectedly rose to 4.5% in April from 4.3% in March, the highest level in about four and a half years. The probability of a rate hike at the next meeting dropped to just 3%, from 13%. Pricing for August pared to 40% from 60%. Markets now await key inflation numbers this week for further clues on the policy outlook.

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