Australia’s 10-year government bond yield climbed to around 4.9%, hitting a four-week high as global oil prices jumped amid renewed US-Iran tensions. The US launched a fresh wave of strikes against Iran and revoked a license allowing the country to sell oil following recent attacks on ships transiting the Strait of Hormuz. The renewed escalation threatened the interim US-Iran peace deal and drove oil prices higher, stoking inflation fears and raising prospects for interest rate hikes. Meanwhile, RBA Assistant Governor Sarah Hunter said recent oil price shocks had weakened consumer and business confidence but noted the Australian economy remained resilient. She also reiterated that the central bank would act as needed to return inflation to target and maintain sustainable full employment. Still, markets continued to expect the central bank to keep its cash rate unchanged in August after delivering three rate hikes this year, while the odds of a November hike has eased to around 40%.

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