It's time for a change in view With the market all but pricing in a 1.75% cash rate, the 3 year bond yield hovering around 1.90%, 10 year yields around 2.50% and the Australian dollar US$0.78 or so, it's time to look for the next trading opportunity. It's time to position for a back up in yields in the bond market and a change in current market pricing for the RBA cash rate. This change in view is not based on any radically different view on the domestic economy - right now and in the near term, things are still very soft, growth is set to remain below par and there still seems to be a rate cut or two in the RBA's kit bag. Interest rate markets now know this and have more or less moved to where I thought they might get to. It is now prudent to start thinking about how markets will trade over the next year and lower yields and a lower AUD seem less likely than a rise. Detail in the following link: (VIEW LINK)



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James Marlay

Interesting article Stephen - always tough to go out there against consensus views in the market. It will take a little while for the effects of a lower dollar, reduced rates and any wealth effect flowing on from the equity markets to be felt. These could well be a 2nd half CY15 story.