What's driving Aussie bond and currency markets

What's driving Aussie bond and currency markets? Katrina King, Director of Fixed Income Research at QIC says the reason why Australian bonds and the AUD are being driven up is that fears of a China meltdown are subsiding. King says that investors are now expecting Chinese government stimulus to stabilize growth and that's adding pressure to our currency. We have seen vast inflows back into the Aussie government bond and ¬derivatives market from offshore and that is adding pressure to keep the ¬Aussie dollar up. A lot of US hedge funds were playing that negative China/negative Australia story, but as that story has faded they have looked back to Australia for the yield and the triple-A nature. King does not believe the RBA will raise rates until early next year and is forecasting inflation to remain low. (VIEW LINK)


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