Australian Dollar Australian interest rates

Australia dollar levitating as bond spreads collapse

Tuesday, 3 March 2015

In advance of the RBA meeting today, Australian short end bond yields have plunged to record lows. The 2 year yield is at 1.81%, almost fully pricing two more rate cuts, the 5 year yield is at 1.98% and the 10 year is at 2.49%, still 20 pips above its recent low:

RBA easing has also reversed the curve flattening that’s been in play for a year, indicating better hopes for growth:

And the US/Australia bond spread has completely collapsed:

The full text of this article is available to MacroBusiness subscribers

$1 for your first month, then:

$24.99 / month

$249 / year

Cancel at any time through our billing provider, Stripe

About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.