RBA’s interest rate bomb forms VaR mushroom cloud

Friday, 29 October 2021

Wow. What a screw-up this is:

The Reserve Bank of Australia defied market expectations by opting against defending its yield-target on Friday, a decision that is fueling speculation that policy makers are set to abandon the program.

Traders pushed the yield on the April 2024 note — which the bank aims to hold around 0.1% — to more than seven times that level. Yields on the benchmark three-year bond due November 2024 also rose, along with longer maturities.

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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.