Australia’s 10-year government bond yield edged down to around 4.21% as investors parsed the latest labour market report. The economy shed 2,500 jobs in May, following a revised 87,600 increase in April and compared to forecasts of a 25,000 rise. Meanwhile, unemployment rate held at 4.1%, in line with expectations. The report had minimal impact on market expectations for monetary policy easing by the Reserve Bank of Australia.
Markets are currently pricing in a 65% chance of a 25bps rate cut in July, more or less the same as before. Globally, investors assessed the US Federal Reserve’s decision to hold rates steady, while signaling a slower pace of future cuts. Fed Chair Jerome Powell also warned of higher inflation in the coming months due to the Trump administration’s planned tariffs. On the geopolitical front, markets are focused on whether President Donald Trump would involve the US in the escalating Iran-Israel conflict.
