The Aussie bond market is on the move and it is sending some pretty whacky signals. The long-end is backing up fast:
Following the US:
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While ignoring China which has flattened out but yields are still trending down:
This has jackknifed the Aussie bond curve higher signalling an imminent boom in something. Either growth or inflation or both:
My best guess is that this is some mix of the energy crisis and Fed taper. Australia is caught in very powerful cross-currents from different commodities that give this some underpinning but also make it doubtful as a reliable signal.
On the bearish side, there is the iron ore crash, Chinese property shakeout and oil shock.
On the bullish side, there is reopening plus the twin coal and LNG booms.
My view remains that the reopening will be weak, border opening will be highly deflationary via immigration, and that the energy boom is short-term. Moreover, that macroprudential may need to be tightened on runaway credit in the pro-cyclical downside move for the commodity cycle.
None of this connects with bond prices today!