Investors seek higher premium on Australian bonds as debt fears mount

Financial markets are growing nervous about Australia’s federal and state governments’ ability to restrain spending, with bond investors demanding higher returns to fund public spending as the economy faces a potent combination of slowing growth and rising inflation.

Australia’s 10-year bond yield hit 5.15 per cent this week – a peak last seen in 2011 – largely riding a global wave, and the gap between Australian and US sovereign 10-year yield jumped to 82 basis points in March, the widest since 2022.

Source: https://www.afr.com/markets/debt-markets/investors-seek-higher-premium-on-australian-bonds-as-debt-fears-mount-20260520-p5zyxt