Source: Bloomberg & RBA Thought I’d check the Australian Government Bond yield curve to see if the market is confirming my bearish sentiment on the Australian economy and it looks like it is. 3 Year bond yields have dropped below 3%…that’s an ugly indicator for our economy. Send article as PDF
Category Archive: Fixed Interest
pub-5731955080761916
Dec 07
Australian Government Bond Yield Curve…no change in 2 weeks
Source: RBA As the above chart shows the yield curve dropped significantly from the start of August through to towards the end of November and at the end of yesterday after the RBA dropped the cash rate another 25bps to 4.25%, the yield curve is basically the same as it was two weeks ago. Whilst …
pub-5731955080761916
Nov 24
Australian Government Bond Yields…seriously low
Source: RBA Just when you think the yield curve can’t get any lower, the last 8 days have taken another 10 to 15bps off. Sharemarkets have obviously dropped on the Euro-debacle and this yield curve demonstrates not only significant interest rate reductions in the months to come but a significantly slowing Australian eonomy thanks to …
pub-5731955080761916
Nov 03
Australian Government Bond Yields…more rate cuts to come?
Source: RBA In just 3 business days the yield curve has dropped down to where it was at the end of September where markets had experienced eight weeks of gloom and doom. Mind you, a lot happened in the three days to the end of yesterday…including the Greek’s putting significant doubt in the Euro rescue …
Oct 29
Term Deposit Premium very high again
Source: Reserve Bank of Australia The above chart shows the premium banks are paying for their 3 year term deposits compared to 3 year Australian Government bonds from 1992 to the end of September 2011. Since hitting its aboslute high around the start of 2010 and peaking again around July 2010, term deposits are paying …
Oct 29
Australian Government Bond Yields…small improvement
The last month has shown a bit of a bounce-back in the sharemarkets but as the above yield curve indicates, so far its more of a dead cat bounce and there’s a long way to go. The yield curve is still negatively sloping to beyond two years indicating the market is expecting a few rate …
Sep 27
Slight rise for Australian Government Bonds over last 2 weeks
Source: Bloomberg, RBA The above chart uses price from this morning for the 28 September data and as it shows there has only been a slight improvement in the yield curve over the last couple of weeks so really no significant impact on troubled beliefs at this point in time. Overnight the equity markets were …
Sep 25
Reducing Equity Risk with Bonds
Earlier in the week I was at a meeting whereby one of the attendees suggested that in a balanced portfolio (~70% equities) the equities proportion adds around 90% of the risk, and then in yesterday’s Australian Financial Review I see a headline quote from Stephen Nash (FIIG Securities) that said, “If investors replaced half their …
Sep 20
What returns should bonds provide over the next 5 years?
This is one of the most frequent questions I am asked by advisers and my usual answer is, “well, the yield of Australin bonds is around x% so that’s pretty much what you should expect to receive”. I’ve pretty much accepted that my answer is roughly correct but never really tested its accuracy..until now! Source: …
Sep 16
Australian Government Bond Yield Curve…still dropping
Source: Reserve Bank of Australia I’ve just updated my last yield curve from just over two weeks ago and as the above chart shows yields have dropped another ~40bps since then. This is an indication of the lack of global stability driven out of Europe and US and a resolution to their issues is clearly …