In some bad news for the economy, the SMH has a nice little post tracking the yield spread between Australian and US ten year bonds:
Ten-year Australian government bond yields have eased further than 10-year US Treasuries as investors renewed their interest in buying securities following dovish comments from the Fed’s Atlanta President Dennis Lockhart and New York President William Dudley.
The long-term bond yields were trading as high at 3.982 per cent yesterday, but softened to 3.91 per cent this morning. Ten-year US government bonds slipped slightly overnight from about 2.73 per cent to 2.699 per cent.
On the short-term end, three-year Commonwealth Government Securities eased from 2.83 per cent at the close yesterday to around 2.78 per cent in early trade today.
Looking at the spread between the bond yields, they reached a high of 171.4 basis points in March, before current Fed chairman Ben Bernanke’s tapering comments, to a low of 96.1 basis points in August. The yield spread increased slightly overnight and were at 121.3 basis points in early trade today.
More support for the dollar that we do not need. There will be intense pressure on the RBA to cut rates if the Fed does not.
