Policy-sensitive Australian bonds have slumped to their lowest in seven months as markets increased bets on another interest-rate hike by the central bank. The yield on three-year debt climbed to 4.2% on Thursday, the highest since Nov. 27, extending a rise after a report showed Australia’s inflation accelerated in May. That’s after their discount to the benchmark 10-year shrank to the narrowest in almost a year on Wednesday. The tightening spread shows traders are taking the risk of a hike more seriously, said Kenneth Crompton, a senior fixed-income strategist at National Australia Bank Ltd. in Sydney. “An August ... (full story)