Credit Monthly
Australian Credit Monthly | March 2019No major surprises as the RBA maintained the cash rate at 1.5% at its April Board Meeting. The RBA continues to play a waiting game, while economists maintained downbeat tones on the trajectory of rates.
A key development during February was the shift in the expected direction of short-term interest rates as the RBA changed their “next move is up” language with a “neutral” bias.
In line with equity markets, hybrid securities also posted a positive January led by the longer-dated bank notes.
Rate rise expectations tempered in Australia in the September quarter, with the next rate rise now priced in for early 2020.
Not surprisingly, the Reserve Bank of Australia, or RBA, kept the cash rate steady throughout the quarter at 1.50%.
In the Australian Cash Rate Futures market, the expectation of a rate rise has been pushed back to February 2019. This is unsurprising considering the ongoing dovish tone of the RBA minutes.
With consistent economic data and slightly better than expected wage inflation, economists had little reason to alter their forecasts this month.
The expectation of a rate rise has been pushed back to November 2018 after another disappointing round of inflation data and lower than expected building approvals.
In the Australian Cash Rate Futures Market, the expectation of a rate rise has been brought forward to August 2018.
In the Australian Cash Rate Futures Market, the expectation of a rate rise has been pushed back again this month, moving to January 2019.
A mixed bag of data among leading developed economies during October has seen a relatively uneventful month with respect to global bond yields.
Global bond yields were generally wider during September, as positive economic data showed signs the world economy is growing in strength.
Global bond yields continued to tighten during August, amidst a backdrop of strong employment, weak wages growth, and low inflation.
Inflation data created waves this month as weak numbers softened market expectations on tightening global monetary policy.
Sovereign bond yields moved higher in June, as perceived hawkish central bank language reverberated around the globe.
Diminishing supply underlined another strong month for hybrid performance during May, continuing the course of recent months.
It was a mixed bag for hybrid performance in April, with corporate issues drifting wider on average, while major bank issue performance was more evenly split.
It was a mixed month for sovereign bond yields after the Federal Reserve expectedly increased rates, while in Europe some green shoots started to emerge in the form of improving economic indicators.
Global sovereign bond markets rose up from the canvas in January, reminding us that it may not be full steam ahead in the global landscape, particularly in Europe.
Aside from Europe, global sovereign bond yields had a relatively muted month in January as financial markets awaited clarity from the incoming Donald Trump-led US government.
Global sovereign bond yields stabilised somewhat in December after a particularly sharp move up in November, while domestically, the Australian 10-year government bond yield was flat.
November was absolutely brutal for global sovereign bonds and money markets as investors across the globe rapidly priced in expectations of Trump's fiscal expansion and the resulting inflationary impact.
Global bond yields accelerated their widening pace during October as the prospect of a rising US Federal Funds rate became increasingly priced in.
Global bond yields, particularly at the long-end of the curve, widened during September, driven by increasing speculation of an increase in the U.S. cash rate as well as a slow-down in monetary easing programs within the European Union.
Global bond markets took a bit of a breather during August, with yield volatility significantly down on previous months.
Following significant tightening in June, July was more subdued in terms of price movements in global bond markets.
June saw a significant tightening trend in global bond markets, following the UK's 23 June voting to invoke Article 50 of the Lisbon Treaty and begin the process of formal withdrawal from the European Union.
Global bond yields generally tightened during May. Bucking this tightening trend was the US, with the Fed futures contracts implying an increasing likelihood of the Fed hiking rates in the near future.