Sep 13

Australian Government Bond Yields – September

First post in a little while and I’m back with my reader’s (both of them) favourite post…the AUstralian Government Bond Yield Curve (I know this as its the most searched and looked at posts on my blog)…anyway…I digress. ..

What an amazing two weeks in bond markets. As the chart shows there was a strong srop in bond yields during August and since that time the shorter end of the yield curve has increased sharply in less than two weeks. Much of this gain was driven by solid equity markets and the relatively decent economic news that has been out in this month but the sharpest increase has really occurred over the last two business days following the better than expected unemployment figures the Australian Bureau of Statistics released on Thursday.

For the first time in a little while bond markets are now showing a reasonable chance of a Reserve Bank interest rate rise. My personal belief is that overseas weakness (namely US, Japan and Europe) may still prevent this from happening but I’m not going to argue with the market and I agree the chances have definitely increased given our good local economic data. This morning China also released some strong economic growth figures which looks good for us, but then that is the past and I’m sure China would still like to slow the rate of growth down a fair bit yet.

Anyway, looks like the best time to fix your mortgage interest rate was probably two weeks ago and the average mortgage cost is looking a tiny bit more expensive for the moment.

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