Australia’s 10-year government bond yield rose above 4.9%, reaching more than a two-week high as rising Middle East tensions and a fragile US-Iran peace deal fueled inflation concerns. Iran launched multiple missile waves toward Israel over the weekend as a warning against further military actions in Lebanon, casting doubt on a fragile ceasefire as peace talks remain stalled. The prolonged conflict and the continued near-closure of the Strait of Hormuz have disrupted energy supplies from the Persian Gulf, pushing oil prices higher and intensifying global inflation concerns. In Australia, RBA Governor Michele Bullock reiterated last week that the central bank remains firmly focused on bringing inflation down, following three rate hikes earlier this year that lifted the cash rate to 4.35%. She also noted that inflation remains too elevated, stressing that the board will take whatever measures it deems necessary to fulfill its mandate of achieving price stability and full employment.

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