Commentary courtesy of Spectrum Asset Management’s Lindsay Skardoon.
| Close | Prev Close |
Change | |
| Aust. 90 day bank bill% | 1.96 | 1.94 | 0.02 |
| Aust. 3 year bond%* | 2.11 | 2.08 | 0.03 |
| Aust. 10 year bond%* | 2.72 | 2.73 | -0.01 |
| Aust. 20 year bond%* | 3.12 | 3.15 | -0.03 |
| U.S. 2 year bond% | 2.29 | 2.26 | 0.03 |
| U.S. 10 year bond% | 2.83 | 2.82 | 0.01 |
| U.S. 30 year bond% | 3.06 | 3.06 | 0.00 |
| * Implied yields from March 2018 futures | |||
LOCAL MARKETS
Bonds should be steady on the day. With uncertainty rising, the risk off trade on balance appears to be the favoured trade.
U.S. BOND MARKETS
The U.S. deficit is rapidly rising and to attract capital the dollar has to weaken, and interest rates rise. The bonds are already a high yield bond compared to its European trading partners.
Ahead of the Fed’s meeting next week markets are somewhat twitchy. The expectation is that the Fed will hike next week, however, markets will have to look to economic data to determine the economic strength before making any key decisions. The market feels as if it is running each way bet with investors undecided whether they are taking risk off or wish to put the risk on.
