A quick final post for the week before I fall back into bed. The so-called “bondcano” has collapsed this afternoon as markets wake in fright to Australia’s declining prospects. The 2 year has hit a 7 month low and is now only 7bps from pricing the next rate cut, obviously letting go of the global reflation theme:
Arguably the long end is even more mis-priced given the slope is still too steep for what’s coming (which may well be recession):
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As a result the yield spread to the US has hit new sixteen year lows across the curve:
