Why the Australian dollar is going to 40 cents

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Via Macquarie:

Australia-US bond yield differential going negative?

 We think there is an even chance that Australian-US sovereign bond yield spreads fall below zero across the entire term structure (both short and long end) and potentially remain this way into late 2018. This was our expectation at the short end, but the rally in long bonds has already been more significant than we expected and downside pressures do not appear to have alleviated (inflation).

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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.