Source: RBA
I know its just a week and a half since I last provided an Australian Government Bond Yield curve update but over this time the curve has dropped another 20-25bps to mostly be below the bottom from 19th December. This is largely on the back of weak inflation data…deflation if you look at the seasonally adjusted data…and other weak data from Europe and China.
All in all looks like this is the type of market signal that strongly reflects a very weak outlook for the Australian economywhich should guarantee a minimum of 25bps cut by the RBA tomorrow.