Australia Yields Signal Central Bank Tightening Looms

Extra yield on 3-year bond over cash rate is widest since 2010
RBA likely to increase its policy rate in May, ANZ forecasts

The Australian flag flies outside the Reserve Bank of Australia (RBA) headquarters in Sydney, Australia, on Monday, Dec. 4, 2017. Australia's central bank is on track for its longest stretch of unchanged interest rates as it bets a tightening job market will begin to put upward pressure on wages -- at some stage.Photographer: Brendon Thorne/Bloomberg

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By Masaki Kondo

January 19, 2018 at 2:41 AM UTC

This article is for subscribers only.

Investors in Australia’s bonds are boosting bets the central bank will join its global peers in shifting toward a more hawkish policy stance.

The extra yield on the nation’s benchmark three-year bonds over the central bank’s overnight cash rate jumped to 75 basis points Friday, the widest since May 2010. Retail sales and employment both grew at more than twice the pace economists predicted, according to the latest data published this month.