I love Felix Salmon’s description which I’ve shortened and paraphrased just a little bit… The people selling Treasury bonds to the Fed are big banks, who are told in advance exactly how many Treasury bonds the Fed wants to buy. As a result, they’re likely to buy Treasuries ahead of the auction, with the intent …
Category Archive: Economy
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Nov 02
The RBA goes up and so does the Yield Curve
Normally I try and produce the chart before the RBA’s decision but was a little slow this time but it is a little intersting to see the market’s reaction to the RBA’s decision to increase the cash rate to 4.75% and its shown in the chart above…an increase in yields across the all maturities although …
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Oct 08
Mini Economic and Markets Update
Compared to the downbeat global economic data and sharemarket performance of August, the month of September was quite the opposite. The risk trade was the success story over the last month with commodities, sharemarkets (particularly small cap) and the Australian dollar all showing strong gains. In Australia the positive sentiment started early September with the …
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Oct 03
Bond Yields – Rate Rise now a near Certainty
As mentioned around a month ago after the month of August a rate rise from the Reserve Bank appeared a long way away but September has certainly been a month for the risk takers. Aussie Dollar near record highs and the sharemarkets are up so of course that means government bonds are down. The above …
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 …
Aug 30
A short piece on the Euro Sovereign Crisis
The Global Financial Crisis (GFC) started out as a credit crisis. In simple terms, the credit crisis was a situation whereby banks stopped lending, credit markets stopped operating and the availability of money to many businesses (and individuals) became so scarce that those most exposed became insolvent. The survival of the biggest banks around the …
Aug 30
Simple Economic Update
The month of July saw the return of strong sharemarkets both in Australia and overseas with the first positive monthly performance for four months. This return of confidence was largely due to investors reacting positively to the European Banking stress tests where 92% of European banks tested passed. Alongside of the good sharemarket performance was …
Aug 23
Australian Government Bond Yield Curve – August 2010
Source : RBA The above chart shows the Australian Government Bond Yield curve the day after each of the RBA’s interest rate increases this year (i.e. 4 March, 8 April, and 6 May), the end of the financial year and through to last Friday. Since 8 April the yield curve has continued to flatten suggesting …
Aug 23
Interesting Market Stat from Paul Krugman
The link to his blog is here…anyway…the stat is… One thing you sometimes hear is that the game will be up when the ratings agencies downgrade U.S. debt. I wonder how many of the people saying this know that Moody’s and S&P downgraded Japanese debt in 2002, with Moody’s actually putting it below Botswana and …
Aug 04
RBA Rates stay on hold – may stay that way for a while
The current setting of monetary policy is resulting in interest rates to borrowers around their average levels of the past decade. With growth likely to be close to trend, inflation close to target and the global outlook remaining somewhat uncertain, the Board judged this setting of monetary policy to be appropriate. This was the final …