Australia 10-Year Yield Eases

Australia’s 10-year government bond yield fell to 4.36%, having touched a one-and-a-half-month high in the previous session on the back of stronger-than-expected GDP data. The economy expanded 0.6% in the June quarter, topping forecasts of a 0.5% gain and lifting the annual growth to its fastest pace in nearly two years, driven primarily by household consumption. The upside surprise reinforced expectations that the Reserve Bank of Australia will keep interest rates on hold later this month. Additional data released today supported this view. Australia’s goods trade surplus widened to A$7.31 billion in July from A$5.37 billion in June, as exports rose 3.3% while imports fell 1.3%. At the same time, household spending climbed 5.1% year-on-year in July, the highest growth since November 2023, following a 4.6% rise in June. On Wednesday, RBA Governor Michele Bullock warned that further interest rate cuts may be unlikely if consumer spending continues to rise rapidly.