Don’t get me wrong: if the Reserve Bank of Australia is mad enough to cut its cash rate further and embark on its own unique asset-buying binge, there’s loads of upside left in local government bonds.
Specifically, if the 10-year government bond yield falls from 1.91 per cent today to, say, zero per cent, its price will leap 17 per cent from $120.7 to $141.4. That’s a handsome return on any measure.
