Global Yields Jump as Oil Shock Reprices Rates

• Global bond markets sold off sharply as oil pushed comfortably above US$100/bbl, intensifying concerns that central banks may need to keep policy tighter to contain inflation. The US 10-year Treasury yield rose 11bp to 4.59%, with Australian domestic yields following the move higher.
• The Trump–Xi meeting concluded without any immediate resolution on the Strait of Hormuz, which remains closed and is looking increasingly unlikely to reopen soon. The ongoing disruption has kept upward pressure on oil and added to the global inflation risk premium.
• In Australia, attention now turns to this week’s labour force data, with consensus expecting employment to rise by around 18k in April. That would be broadly in line with March’s 17.9k gain and suggest the labour market remains in reasonable shape.
• Consensus expects the April unemployment rate and participation rate to hold steady at 4.3% and 66.8% respectively. Unless there is a major surprise, the data is unlikely to materially shift the RBA’s near-term focus, with inflation still the more pressing policy concern.