Monday, April 20, 2009

AUSSIE YIELDS

[AUSSIE YIELDS] are falling dramatically this morning; with the benchmark 10yr Govt bond yld plunging 23bps to as low as 4.36% and 2yr yld briefly falling below 3.20% versus a prior close of 3.37%. The hefty rally in USTs unleashed a heap of short covering by CTAs and Japanese retail investors alike; but with the market's 'safe haven" surge noted to be even outperforming the US, resulting in a substantial narrowing of yield differentials. RBA's April minutes and a speech by Governor Stevens are now being awaited for further rate leads; but in the meantime, market is pricing in a 75% chance of a 25bps rate cut in May's meeting to 2.75%.

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