It’s Brexit, it’s oil, it’s deflation, it’s Donald Trump. It’s everything and all of it is pushing bonds. Aussie long end yield hit new record lows at 2.07% yesterday:
But US yields are falling even faster now:
As are German yields:
And Japanese yields:
Bond slopes are also tumbling everywhere with Australia still on the verge of inversion:
The US flattening fast:
Though Germany has improved from the European recession:
But not Japan!
And that’s where we come to lingering strength in the Aussie dollar. Spreads to the US have snapped back a little:
Germany is looking more promising as it trends down:
Same with Japan:
As we’ve seen throughout this interest rate cycle, the RBA is behind the curve and thus we have a capital account surplus problem.
I’m beginning to wonder if Australia could indeed go to zero interest rates just so long as everyone else is -1%!
