While everyone else is fixated on the sharp falls in equity prices, we look at bond yields, and they have their own sharp responses

For the first time since 2011, Australian Government 10-year bond yields have leapt to over 5% today.

That is up +13 bps today alone.

The rises for shorter maturities are even higher with the three year AUGB up +17 bps.

These shifts come as markets around the world turn sharply bearish. Driving the turn is war risk, compounded by much higher inflation expectations.

Of you are an investor, you need a much fatter premium to invest at the moment.

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Of course, these yield jumps are for pristine risk-free Government bonds. For commercial funding, the premiums will be even higher.

Bearish sentiment, higher inflation expectations, and general risk aversion all are things the RBA will be watching nervously.

Money markets are bringing forward the possibility of RBA rate hikes. As at this morning, before markets opened, this is how they were pricing in the chance of a hike by the central bank.

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That is, a 50% chance of a +25 bps rate hike as soon as  and a 100% chance on May 9, 2026.

After today, these chances are not likely to have retreated.

We will report tomorrow on how this has tracked today