Today I have relegated bond yields within the report but we still cannot ignore them at the moment:
- Early yesterday morning local bond yields followed overseas strength with the 3-years surging towards 0.85%, paying no attention to the 0.1% cash rate in the process.
- However sellers prevailed through the day, helped by the RBA minutes, which at one stage produced a whopping 0.152% reversal.
In our opinion, Mondays largest CPI (inflation) print in more than a decade across the Tasman set the trend for the region i.e. we have confirmation of our view that yields / rates are going higher. However we believe its going to be a big ask for the local 3-years to punch through the 0.75-1% area before the RBA relaxes its dogmatic stance towards no hikes until 2024.
MM remains bullish bond yields medium-term
