Equity Engineer – June 2015 | Bond market stability to drive Aussie market recovery

The bond market selloff has seen bond yields rise and put pressure on the yield trade dominated Australian market. We expect central banks to support a bond market stabilisation and bring down the yields to keep borrowing costs down. We see the stabilisation of the bond market to support our equity market recovery. Recent profit taking has brought the market down below where we see markets yield weighted fair value. Long term investors should accumulate good quality growth/yield stocks while the risk averse will be better served to wait till the back end of this month to ride out the tax loss selling, Greece risk and bond market risk while bank dividends will flow back in and support the market in early July. (VIEW LINK)