Bonds give Glenny the bird

Wednesday, 3 February 2016

If there are no more rate cuts coming the bond market doesn’t know about it. Following yesterday’s even handed RBA statement the short end of Aussie bonds has been heavily bid and yields have broken to new lows at 1.86%, pricing half of another rate cut:

US yields have been coming even faster and only have one more rate hike priced now:

Thus the spread has been widening, especially at the long end:

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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.