Aussie bonds sharply bid

Monday, 27 July 2015

Australian bonds are sharply bid this morning as the commodities rout continues and deflation fears grow. The 2 year hit 1.84% this morning and although it’s not a new low for the move, the chart is looking pretty bullish for yields:

And why not? With commodities tanking, iron ore yet to break (but going t0) and the banks now hiking rates into the investor property bubble, more rate cuts are coming. In terms of the longer view, here is the set up across the curve:

Australian yields are coming in faster than the US:

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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.