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The RBA has driven yields down but dang is that curve warped:
That slope says massive recovery with inflation imminent! Not.
As the risk parity liquidaton eases I expect long end yields will fall along way. Indeed, for some enterprising hedgie with the firepower to do it, it is a singular arbitrage opportunity. There is no recovery or inflation coming.
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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.