Aussie 3-Year Bond Looks Appealing After Yield Jumps, CBA Says
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Source: BFW (Bloomberg First Word)
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CBA AU (Commonwealth Bank of Australia)
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Adam Donaldson (Commonwealth Bank of Australia)
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(Bloomberg) -- Australia’s 3-year bond yielding around 2.15% is starting to look very appealing, says Adam Donaldson, head of debt research at Commonwealth Bank of Australia in Sydney.
- “It’s probably time to go long,” he says by phone Monday
- “We’ve certainly seen some quite solid data” including employment figures, he says. “That has seen the market starting to consider whether the RBA could be tightening policy earlier than previously thought”
- Still, the view that Bank of Canada’s tightening may foreshadow a similar move in Australia seems inaccurate as there continues to be substantial slack in the local labor market
- RBA wouldn’t want to aid appreciation of Aussie dollar by signaling a tightening bias
- Australia’s 10-year yield spread over Treasury note may widen “a little bit further” from 60bps because background environment is still a bit too volatile and uncertain to expect to see real money starting to buy that
- Yet, the spread is definitely approaching “value territory”
- NOTE: 3-year yield rises 5bps to 2.17%, highest since December 2015
- NOTE: Spread reached 61bps on Sept. 6, most since Oct. 20
Alert: HALISTER1
Source: BFW (Bloomberg First Word)
Tickers
CBA AU (Commonwealth Bank of Australia)
People
Adam Donaldson (Commonwealth Bank of Australia)
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UUID: 7947283