Australian bond yields and inflation

Australian bond yields and inflation. Australian government bonds are trading at extraordinary high prices and low yields. The only times yields were anywhere near this low were in the 1930s depression and in the 1890s depression, but in both of those depressions inflation rates were severely negative (deflation). Today, inflation is positive. Unless you believe Australia is heading for another depression in the next 10 years, bonds appear over-priced at current levels. Yields may fall even further due to the weight of foreign money, but real returns for bond holders are likely to be very poor over the medium to long term from current levels. The full article discusses the potential for bonds to be in a speculative bubble and is available here: (VIEW LINK)

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