Bond market mulls dire scenario as budget threatens property sector

The Australian bond market is being caught in a tug-of-war. On one side, global inflation anxiety is dragging interest rates upward. On the other, a softening local economy and a budget-induced property downturn is pulling them right back down.

If the economy stalls while inflation remains high, Australia risks sliding into stagflation. It is a nightmare scenario for the Reserve Bank, leaving policymakers with few options to relieve the pressure on struggling households and businesses.

Source: https://www.afr.com/markets/debt-markets/bond-market-mulls-dire-scenario-as-budget-threatens-property-sector-20260522-p5zzqw