Australian bond yields are poised for a breakout. Another good jobs report today will do it. Two year yields are right at the ceiling that has capped them for three years. Five year yields are approaching the same:
Ten year yields are further back so the curve is flattening:
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What kind of flattening is it? Markets have been seized by the “global synchronised growth” thesis so that would suggest it’s bullish. But given Australia’s weak growth prospects and bugger all inflation I remain of the view that it is the bearish variety. Especially with China set to slow.
