Bear flattening intensifies as Aussie outlook darkens

Monday 13 February 2023

After the RBA’s SoMP update, there was no movement in the 1/5 curve inversion overnight as it forecasts a per capita recession, at best. I’ve added the 1/10 curve and it is only 11bps from inversion, something that has not happened since before the GFC:

The bear flattening is also grabbing the long end now with the 2/10 at 23bps, new lows for the cycle, and looking perilously like it is about to play catch down with the US:

As it should. The Aussie economy is in more trouble than the US is.

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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.