As the chart above shows it was another great month for bond investors. Over the last 3 months, yields have dropped around 100bps across the curve which for many bond funds (duration of at least 3 years) results in capital growth of at least 3% is addition to the usual income of around 5%pa. This …
Category Archive: Fixed Interest
pub-5731955080761916
Aug 19
Another dodgy market update
Obviously a pretty difficult investment environment at the moment. Markets tanking again overnight and following on in Australia this morning. Watching Billabong drop around 25% this morning demonstrates the benefits of diversification…I’d hate to be an adviser with an overweight Billabong position in my client’s portfolio. Anyway I digress. Volatility in the sharemarkets will continue for many …
pub-5731955080761916
Aug 08
So much for the downgrade…it’s all about growth expectations
So the US has just had its first trading day since S&P downgraded US debt to AA. A downgrade in anyone’s debt would normally result in an increase in yields as the debt is viewed as riskier so investors expect a higher yield to be compensated for that risk. What happened in the US overnight …
pub-5731955080761916
Aug 03
De ja vu?…and a messy interest rate commentary
Maybe I’m missing a few details and hopefully I’m wrong but I remember in the middle of 2008 the RBA were talking up inflationary concerns due to the China effect, raising and threatening to increase rates despite overseas blow-ups (Bear Stearns, etc). Right now, it has a similar feel, the RBA is once again concerned …
Jul 28
European trouble again?
Italy – Germany 10 Year Bond Spread Source: Bloomberg The above chart shows the spread between Italian 10 year bonds and German 10 year bonds. I found it via Paul Krugman’s blog. As Krugman suggests it looks like things are starting to look pretty grim again in Euro land as the spreads are heading towards …
Jul 28
Inflation Up? Not really just interest rate rise panic
The above chart has been copied from www.rba.gov.au and shows annual CPI change over the last 16 quarters and guess what? The latest quarter’s figure, excluding volatile items is 2.5%! Right in the middle of the RBA’s inflation target of 2% to 3%. When the Reserve Bank looks at inflation they do not, or should not, consider …
Jun 09
European Bond Yields
I found this table on Calculated Risk and liked it so much I had to have my own…as I’m sicking of looking up other websites to find the latest Euro yields. [table id=1 /] Send article as PDF
Jun 07
Reserve Bank No Change…but some movement on the yield curve
Source: Bloomberg As the above Australian Government Bond Yield curve chart shows, whilst the Reserve Bank left the cash rate unchanged, the shorter end of the yield curve decreased in yield by up to 5bps. This represented around a 1% increase in price of the Australian government bonds maturing within the next 5 years…quite a …
Jun 02
Australian Government Bond Yields – still flat
Source: RBA The above chart of the Australian Government Bond yields shows little change since 23 May with just a marginal flattening at the longer terms to maturity. No surprise given financial markets continuing its volatility combined with significant risks that include Greek bond default and poor economic news out of the US. Whilst this information …
May 25
Australian Government Bond Yield Curve…flattening
Not surprisingly the Australian Government Bond yield curve has flattened signficantly over the last month. The longer part of the curve is lower than it has been for much of this year which is typically an indication of less confidence in the economic outlook in our country. On the other hand, the shorter term yields …