Advertisement
As the RBA meets today, the bond market is moving well ahead of it.
Aussie yields are in free fall with the belly of the curve, especially well-bid. Yield uptrends are breaking:
Curves are still mixed. The 1-5 year is even more heavily inverted, which is a great predictor of ongoing per capita recession. The 2-10 is not forecasting anything wrong with headline growth:
Advertisement
Spreads to the US are climbing as Albo’s Inflation Island lags the rally. Yet so far, it is not very material:
Advertisement
It makes sense that we move more slowly given higher inflation than elsewhere but local yields will ultimately catch down as China and commodities come apart over the next two years.
To wit, RBA cash futures are now pricing five cuts in 18 months:
Advertisement
It will be more.
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.
Advertisement