Australia’s 10-year government bond yield rose to around 4.74%, rebounding after briefly touching a three-month low in the previous session, as expectations grew that the RBA is edging closer to a potential March rate hike. This followed remarks from Governor Michele Bullock, who said the board’s March meeting would remain open to a possible increase and pushed back against assumptions that policymakers would wait for Q1 inflation data, due in late April, before deciding on a move in May. Markets are currently pricing in about a 28% chance of a rate hike at the upcoming meeting, while fully anticipating an increase in May. Investors are also looking ahead to Q4 GDP data due this week for additional direction. Meanwhile, markets continue to monitor the escalating conflict in the Middle East, with investors wary that rising oil prices could stoke inflationary pressures while heightened geopolitical risks dampen sentiment and drive flows into safe-haven assets.
