Bonds go boom as Aussie recession takes centre stage

The Aussie curve smash is gaining momentum. All yields fell overnight:

The 1/3 year curve is now decisively inverted indicating rising recession risk. Further out the curve, the flattening is going under a steamroller:

I expect the entire Aussie curve to invert in due course. The RBA has overcooked it.

TD Securities has more:

We buy Aussie govvies. The past year has seen very high correlations across regional rates marketsas central banks throughout DM have tightened in synchronization. But heading towards 2023, central banks have started to chart different courses. Australia is one of the most vulnerable economies to rising interest rates and the RBA has slowed the pace of tightening correspondingly. While we expect further tightening from the bank, the end of the tightening cycle is now in sight. Moreover, the market is pricing in a terminal rate of 3.65% in 2H23, but with the global economy heading towards recession in 2023, a lot could wrong before then–in the case of Australia, a notable stumbling block is a bumpy China reopening. Finally, the Aussie 10y already looks too high for the priced-in terminal rate (see chart below left):

Yep.