Category Archive: Sovereign Crisis

Mar 20

Australian Government Bond Yields…approaching normal

Well…not normal yet. The shorter part of the curve suggests the market is expecting another two 25bps cuts by the RBA but with the Euro sovereign crisis well and truly looking much better its highly unlikely there’ll be any cuts soon. Whilst there’s plenty of evidence that shows the Euro sovereign crisis has improved, nothing …

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Feb 07

A little bit of Bond misinformation

I was just reading the latest riveting story on bonds in this month’s Asset magazine and I feel compelled to share an example of misinformation that tends to annoy me a little (I know its probably a little pathetic but anyway)…John O’Brien, van Eyk – Head of Research, apparently said that many of the great …

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Jan 10

The change in outlook for the 2011 Australian Economy in one picture

Source: RBA The above chart shows pretty much what happened to the outlook for the Austrlaian economy and why bonds were the best investment for the year. It shows the longer terms yields (3 years and above) dropping by up to 200bps thus providing very large capital gains for bond investors who had the courage …

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Dec 19

A few too many ‘China Hard Landing’ stories for my comfort

I’ve read a few too many times how Australia is well positioned because of its exporting links to China and how this should help us escape any serious economic issues flowing out of Europe. Obviously our markets haven’t quite agreed with that with bond yields dropping massively over recent months and our equity market continuing …

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Dec 11

Euro Summit…far from a resolution

I’m not completely familiar with all details coming out of the Euro summit a couple of days ago so I thought I’d cheat a little and point out some conclusions from a couple of my preferred econobloggers, Paul Krugman and Felix Salmon. Firstly Krugman… European stocks are up today, and I have no idea why. …

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Nov 10

Euro Breakup…very painful indeed

The reasons why the Euro is a failing concept have certainly been well documented and spoken about. Basically, without a fiscal union, monetary policy and a single currency are instruments that are too blunt to aid struggling countries when other countries are experiencing different levels of economic growth and/or inflation across Europe. For example, the German economy, which …

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Nov 03

Australian Government Bond Yields…more rate cuts to come?

Source: RBA In just 3 business days the yield curve has dropped down to where it was at the end of September where markets had experienced eight weeks of gloom and doom. Mind you, a lot happened in the three days to the end of yesterday…including the Greek’s putting significant doubt in the Euro rescue …

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Oct 29

Australian Government Bond Yields…small improvement

The last month has shown a bit of a bounce-back in the sharemarkets but as the above yield curve indicates, so far its more of a dead cat bounce and there’s a long way to go. The yield curve is still negatively sloping to beyond two years indicating the market is expecting a few rate …

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Sep 22

Europe equity markets getting smashed…

…and US futures not looking much better. The Euro Stoxx 50 is down 4.4% at the time of writing; UK, German, French, and Spanish equity markets are all down more than 4.3%. The S&P500 futures are down around 1.5% and Australia’s SPI200 is also down around 1%. Plenty of downside risk yet whilst politicians kick …

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Sep 10

A few thoughts on investment strategy for today

With the US heading towards recession and the Euro Sovereign Crisis getting ugly again where to invest one’s funds has never been tougher. Australian bonds yields are around 4%, meaning they are on PE ratio of 25 which compared to local and global shares, which are currently on forward PEs of around 10, are very …

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