Commentary courtesy of Spectrum Asset Management’s Lindsay Skardoon.
Close | Prev Close |
Change | |
Aust. 90 day bank bill% | 2.01 | 2.00 | 0.01 |
Aust. 3 year bond%* | 2.16 | 2.16 | 0.00 |
Aust. 10 year bond%* | 2.67 | 2.68 | -0.01 |
Aust. 20 year bond%* | 3.06 | 3.07 | -0.01 |
U.S. 2 year bond% | 2.27 | 2.27 | 0.00 |
U.S. 10 year bond% | 2.78 | 2.85 | -0.07 |
U.S. 30 year bond% | 3.03 | 3.08 | -0.05 |
* Implied yields from June 2018 futures |
LOCAL MARKETS
Bonds to rally, because it’s a risk-off day. The days, however, of not shorting the bonds, are becoming fewer as the risks for bonds climb. Over time, markets will fret over lost economic growth caused by the distraction of the trade blow-up and a possibly over-aggressive Fed, reacting to inflation as a result of tariffs. Put that in context with a widening deficit and it’s a nasty brew. Bonds will inevitably rise and so too the Aussie bonds.

U.S. BOND MARKETS
Bonds rallied on the “risk-off” trade, however, much of the interest was in the longer end of the bond market. Bonds for the moment are behaving but, at some point, either the currency or bonds will slip.