Aussie bonds price rate cut, spreads tank

Friday, 22 July 2016

New record highs for the Aussie bond market today as it prices imminent RBA action this time at the short end with two year yields at their lowest ever 1.52% and the five year at 1.55%:

The ten year is being held up by stronger US prospects and rising chances of Fed tightening (wrongly in my view) so we’ve seen a little curve steepening though it still looks awful gloomy:

Spreads to the US have hit new lows at the long end and the short is heading that way:

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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.