Bonds yields and cash rate to keep falling
My view is that the trend in interest rates will be lower over the next year – even with the US Fed trying to lift its funds rate. In Australia, I see the RBA cutting the cash rate at least twice more to 1.25% over the next year and the Australian ten-year bond yield pushing down to around 1.7% over the next year. Persistently low inflation and the RBA’s response is the main reason for lower interest rates locally. The currency market has not factored in the possibility of the US funds rate pushing up close to the Australian cash by mid-2017 or the likelihood of the Australian ten-year bond yield trading lower than the yield on a US 10 year Treasury. Lower Australian interest rates and spread relative to US interest rates are one factor pointing to the Australian dollar trading lower. (Stephen Roberts, Chief Economist)
Altair Asset Management (Altair) is a high conviction, active Australian equities manager whose investment philosophy is based on understanding the drivers and impact of change. Altair applies macro thematic research to uncover trends which are...
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