RBA triggers bond bloodbath, rates shock

Wednesday, 4 May 2022

Well done to the RBA. Having promised rock bottom rates to 2024, it has now unleashed the greatest single greatest interest rate shock in modern history:

There is nothing in the Australian economic outlook to support these rates. It is some combination of failed RBA credibility, Wall Street commodities narrative, and temporary post-COVID bounce.

The Australian curve has started to flatten but remains far too steep:

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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.