Australia’s 10-year government bond yield held around 4.7%, sitting near a four-month low, as falling oil prices and narrowing yield spreads driven by a hawkish US policy outlook outweighed a rebound in domestic employment data. The economy added 40,300 jobs in May, rebounding from a revised decline of 40,600 in April and above market forecasts for a 30,000 increase, while the unemployment rate dipped to 4.4% from 4.5%, as expected. The latest jobs data followed Wednesday’s mixed inflation figures, which left markets split on another rate hike, priced at around 50% by year-end. Meanwhile, mounting wagers on US interest rate hikes have helped Australian bonds outperform Treasuries, shrinking the Aussie’s yield premium. Last week, the Fed signaled growing support for tighter monetary policy, with Chair Kevin Warsh reaffirming his commitment to restoring price stability. Progress in US-Iran peace talks have also pushed oil prices back to pre-conflict levels and eased inflation concerns.

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