Bonds destroyed as Fed nears

Wednesday, 16 September 2015

Wild action in bond markets overnight. There is no obvious reason for it beyond the possibility of a Fed rate hike, which OIS markets now give a 25% chance, but yields are rising and prices falling quite fast. Bullish trends are a long way from being broken except at the short end of the US curve where yields rocketed 11% to their highest level in four years:

However the trend in the curve remains flattening as the long end bull trend remains established:

In Australia, rate hikes are almost priced out again as the short end heads for 2%:

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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.