Australia’s 10-Year Bond Yield Falls After Jobs Report

Australia’s 10-year government bond yield dropped to around 4.35% as fresh labor market data strengthened the case for a rate cut next month. Australia’s jobless rate rose to 4.3% in June, the highest since November 2021 and exceeding forecasts for an unchanged 4.1%. In addition, employment increased by 2,000, well below expectations of a 20,000 gain, following a revised 1,100 fall in the prior month. The data showed the first clear sign of weakness in what has been a notably resilient labor market, prompting traders to fully price in a rate cut in August. Markets are also anticipating another cut to follow, with better-than-even odds of a third. Today’s report is crucial for the Reserve Bank of Australia, as the strength of the labor market—and concerns it could reignite inflation—has been a key reason for its cautious approach to policy easing. The second-quarter CPI report, due at the end of July, is now seen as the next major indicator that could shape the RBA’s policy outlook.