Australian yield curve plunges towards inversion

Friday 8 July 2016

I’m not sure why there is even any debate about the direction of the Australian cash rate just now. Bonds are screaming for more cuts. Overnight we saw some selling across maturities globally but the impact was to flatten the curve. The Aussie 2/5 is now under 2bps from inversion and the trend is crystal clear towards falling growth prospects:

The US curve is flattening fast as well:

And German:

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.