Jan 22

Interest Rates…relatively stable but a minor dip at the long end

Source: Reserve Bank of Australia

The government bond yield curve certainly expects another 50bps in RBA hikes this year with bonds yielding in the second half of this year trading around 4.3% to 4.4%. But since the start  of the year the yields in longer term bonds have declined a little…this indicates a slight drop in confidence of the Australian economy this year.

As has been widely published, the Australian economy has performed relatively well compared to other developed nations around the world and this is largely thanks to the strong links of the Asian developing economies and their continued hunger for our commodities. With China starting to tighten its credit belt a little there is no cause for alarm, but complacency is not appropriate.

In a week or two, the half yearly reporting season begins and after a few months of relative lack of volatility, I’m sure reporting season may well change that. With US, Japan, and much of Europe in a little economic disarray, the risks still exist, so it should be another interesting year for investors.

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