Morning Report Thursday 5 February 2015
The “YIELD PLAY” feels like it needs a rest after Telstra (TLS) and Commonwealth Bank (CBA) have both rallied approximately 10% in 3 weeks. Yesterday, we saw the market rally strongly for the 10th consecutive day, but interestingly both TLS and CBA were in negative territory at 3pm, they and the market simply need a rest. I have very mixed feelings at present on US equities as you all know, but the local yield stocks should remain supported if we get a correction overseas. The feedback I am getting from friends on US trading desks is they have not seen so much interest in Australian equities for years, I assume due to the low $A.
• Australian 3 year bonds are yielding 1.86% today while CBA will pay approx. 6.5% fully franked over the next 13 months – a simple game.
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