Australia 10-Year Bond Yield Rises

Australia’s 10-year government bond yield rose to 4.32% following news that the country had been spared from the latest round of US tariff hikes. Australia Trade Minister Don Farrell said on Friday the White House had confirmed that no country had reciprocal tariffs lower than Australia, suggesting that President Donald Trump had left the 10% baseline tariffs on Australian goods unchanged. This helped ease investor concerns over potential trade frictions with the US. On the economic data front, producer prices in Australia rose by 0.7% in the June quarter, below forecasts of a 0.9% increase, adding to the case for a possible rate cut next month. The data follows a soft consumer inflation report earlier in the week, which showed that underlying inflation is steadily approaching the Reserve Bank of Australia’s midpoint target of 2.5%. Markets are currently pricing in a near-certain chance of a 25bps cut in August, with rates expected to bottom out around 3.10% by year-end.