See the latest Australian dollar analysis here:
Us yields may be falling owing to the peak in its inflation burst and coming disinflationary bust, but they can;t down to Aussie yields which are falling even faster. The Aussie 10 year yield inverted negative versus the US for the first time in eight months overnight. During the recent bond back-up the spread blew out to as much as 50bps:
Australian inflation has been badly lagging the US rebound. And now our curve has begun to flatten as well as markets wake up to peak COVID rebound and the coming iron ore ore accident:
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The belly of the curve never even got off the carpet, crushed by RBA yield curve control.
What happens from here depends very much on whether iron ore or the RBA panics first. My bet is on the former with more curve flattening ahead.
Once iron ore breaks, the downside for AUD presented by negative spreads will be strong.