Australia’s 10-year government bond yield rose to around 4.81%, the highest since October 2023, as markets scaled up expectations that the Reserve Bank will resume rate hikes next year. Markets have shifted to full price in a rate increase in the first half of 2026, with a 72% probability of an additional move by year-end. This follows the central bank’s decision to hold rates steady at its latest policy meeting, while flagging the potential for a return to tightening in 2026 should inflation remain stubborn. Several major banks have also brought forward forecasts for an early rate hike next year, warning that stronger growth momentum and more persistent inflation could warrant a more prolonged tightening cycle. Investors now turn to the RBA minutes due Tuesday for further insight into the latest policy decision. The Australian 10-year yield is heading for an annual gain of around 10% in 2025.
