Australia’s 10-year government bond yield rose above 4.7%, but remained near a four-month low as markets pared back expectations of further domestic rate hikes, while renewed Middle East tensions reignited inflation concerns. Although the US and Iran agreed to pause further attacks after the recent exchange of strikes around the Strait of Hormuz, oil prices climbed as the latest escalation disrupted the recovery in oil shipments through the strategic waterway that had followed an earlier interim agreement. In Australia, focus turns to Tuesday’s release of minutes from the Reserve Bank’s most recent interest-rate setting meeting. The central bank left the cash rate unchanged at 4.35% at its June meeting following three rate hikes earlier this year. Despite a rebound in employment data, recent mixed inflation figures left the markets split on another rate hike, implied around 50% by year-end, while some have started pricing in rate cuts in the second half of 2027.

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