Bonkers bonds bet on rate hikes

Friday, 4 December 2015

The Australian bond market is going through a moment of pure delusion. Following last night’s ECB WTF, and accompanying surge in US yields, the Australian short end is threatening to break out:

At 2.11% this morning it has almost priced half a rate hike. The long end is also selling:

All of it chasing US yields higher:

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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.