Australian bonds mis-price out rate cuts

Thursday 12 November 2015

The Australian two year bond continues to sell this morning, now entirely pricing out any further rate cuts at 2%:

I guess we can put this down to Bill Evans and his outburst following yesterday’s reasonable consumer sentiment release. It sure wasn’t the Chinese data and US bonds were flat to slightly bid overnight.

The long end of the curve is selling even faster:

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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.