Australian yield curve smashed

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The Aussie bond curve is starting to price in the RBA policy error. Short-end yields are soaring while long-end have stalled out:

The curve has been flattened by a steamroller and the belly is almost inverted:

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Spread to the US are still trending wider offering some support to the AUD:

If Albo’s cowards add energy subsidies today then I’d expect the short-end to blow out some more but hopefully the long-end is near done.

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I still think adding to long-end holdings as they sell is the play.

Recession risks are still getting worse in the US and just got much worse in Australia.

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.