The AUD has been unable to hold its overnight gains:
Bonds continue to rip towards 2016 yield lows:
Worryingly, XJO is no longer trailing a rising equity premium:
Big Iron is up:
Big Gas too:
And Big Gold:
But Big Banks are down:
As is Big Realty:
The driver is more bearish commentary from UBS:
Indeed, the only ‘positive’ data flow continues to be the labour market, with unemployment holding at 5 per cent and job growth continuing at 2.2 per cent on year.
With momentum clearly slowing, we expect the RBA to shift further in a dovish direction, and introduce an easing bias at the May meeting.
However, if the labour market softens earlier than we expect, and CPI is low, we can’t rule out an RBA cut in May.
The yield trade doesn’t work when there’s no profits!
David Llewellyn-Smith is chief strategist at the MB Fund and MB Super which is long international equities and local bonds that will benefit from a weakening Australian economy and dollar so he is definitely talking his book.
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