Bonds price the next rate cut

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From UBS:

CaptureWhile we continue to see the economy neither ‘taking off’, nor ‘peeling off’ into a recession, over the next year or so, we have trimmed 2016 growth from 2.6% to 2.5% in the wake of the recent downward revision to UBS’s global growth outlook.

Beyond the very near term – where it’s very much a grind – it is also worth considering the medium term outlook, & the extent this can impact the outlook for asset markets. While we believe there remains significant questions over the extent to which Australia’s trend rate of growth has slowed from its 40-year 3¼%average, we believe the evidence the domestic economy has embarked on a sharply slower path relative to the past decade is likely to provide a more fruitful discussion (Figure 1).

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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.