Commentary courtesy of Spectrum Asset Management’s Lindsay Skardoon.
| Close | Prev Close |
Change | |
| Aust. 90 day bank bill% | 1.77 | 1.77 | 0.00 |
| Aust. 3 year bond%* | 2.18 | 2.16 | 0.02 |
| Aust. 10 year bond%* | 2.90 | 2.88 | 0.02 |
| Aust. 20 year bond%* | 3.31 | 3.31 | 0.00 |
| U.S. 2 year bond% | 2.22 | 2.19 | 0.03 |
| U.S. 10 year bond% | 2.89 | 2.88 | 0.01 |
| U.S. 30 year bond% | 3.15 | 3.13 | 0.02 |
| * Implied yields from Mar 2018 futures | |||
LOCAL MARKETS
Bonds appear to be settling into a trading range and current levels appear to be around the top. However, as sentiment changes then one should be aware that levels will need to be reset.
U.S. BOND MARKETS
As borrowing costs rise the costs of borrowing for companies will be increasing and so too that of the Government which may be forced to borrow additional amounts if the Trump tax cuts don’t lead to any significant growth in the U.S. And this may be the conundrum that bond investors will have to face later in the year.
The overall trend, however, is that rates and bond yields will rise over the year. Markets are likely to experience a lot more volatility than we have seen over the last two years and especially so in 2017 when volatility ran to an all-time low.
