John Likos: Very interesting times at the moment in the global bond markets, particularly when you look at, let's say, the US and Europe. If we look at Europe, for example, we are seeing recovery in economic growth across many of the nations' states there, which is kind of driving some of these bullish sentiments in the market selling off in some of the bonds and going risk-on again.

In the US, which is probably more relevant to Australia, we've seen inflation expectations increase recently. Now, whether this is a result of perhaps a stronger labor market or more so and more recently, tax cuts that are being implemented in part from the current republican government, we are now starting to see other parties and bodies announce their expectations for high growth at least in the next two, three years.

The Federal Reserve, for example, has come out and said, although they don't believe there will be a long-term impact from these tax cuts, they do believe there will be a pickup in growth in the next two, three years. So, as a result of that, we are seeing inflation expectations build up and consequently, bond yields are selling off as inflation goes up because people need a higher rate of compensation going forward for the higher inflation.

Now, that's filtering through to Australia, particularly given how longer-term bond yields are very highly correlated with the US bond yields, especially, let's say the 10-year bond yield.

And what that is potentially starting to do within the domestic market is, again drive up rates and rate expectations which will have a negative impact on the prices of fixed coupon securities, but generally it's mitigated by the floating rate component of those types of credit securities.

And given hybrids are mainly made up of floating rate notes, we think hybrids are pretty well-protected against an increasing interest rate environment.

Generally, the bond market, as I said, the Australian bond market still remains very strong in terms of its credit quality, and we think there might be some kind of bumps on the fixed coupon side. However, on the floating rate note side, we think the local bond market will hold up pretty well.