Australia 10-Year Bond Yield Steady

Australia’s 10-year government bond yield hovered around 4.27% as investors digested the retail sales data. Australian retail sales rose 1.2% year-on-year in June, surpassing forecasts of a 0.4% increase and marking the largest monthly gain since March 2022. While the data showed signs of a revival in household spending and supported the Reserve Bank of Australia’s cautious approach to monetary policy, it did not have much impact on expectations for a rate cut next month. Investors continue to price in a near-certain chance of a 25bps cut in August, with rates seen bottoming out near 3.10% by year-end. These expectations are largely anchored by the recently soft inflation report, which showed that underlying inflation is gradually moving toward the RBA’s 2.5% target. In contrast, the US Federal Reserve held rates steady at its latest policy meeting and offered no guidance on a widely anticipated cut in September.