Australia’s 10-year government bond yield fell toward 4.18% on Thursday, partially retracing the sharp rise seen in the previous session as investors positioned ahead of the Reserve Bank’s upcoming policy decision. The central bank is widely expected to lower its 3.85% cash rate by 25bps next week, as economic growth remained weak and inflation risks have faded.
Adding to the dovish sentiment, Australia’s trade surplus on goods shrank to a near five-year low in May, as exports dropped while imports increased—signaling cooling external demand. That followed a disappointing report on retail sales on Wednesday, which pointed to subdued domestic consumption. The market also implies further easing to a floor of 2.85%, taking it under most estimates of neutral.
