HALISTER1: Easier to Catch a Pokemon That Get a Decent Bond Yield: ANZ

Easier to Catch a Pokemon That Get a Decent Bond Yield: ANZ

(Bloomberg) -- Australian yields remain attractive relative to avg global yield, even after compressing sharply over course of year, is the view from some of its clients in Asia, ANZ senior rates strategist Martin Whetton writes in note today.
  • Yield, political stability, and lack of alternatives regionally on risk-adjusted basis are favorable, with strong AUD an unexpected windfall as asset owners are typically unhedged on currency
  • Investors also mentioned strong liquidity available in AUD govt bonds, an important factor when investing, with sovereign rating seen as not much a concern
  • While bond investors recognize tight AUD-USD yield spread, they feel RBA will continue to lower policy rates and thus deliver more capital gains
  • Investors see AUD/USD in mid-0.70s to 0.80 range, with possibility of long-term decline
  • Related story: RBA unlikely done cutting, stay long short- dated bonds, says Altius
  • Yield on 10-year Australian govt bonds down 3 bps at 1.878%
  • AUD/USD up 0.6% at 0.7700
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Source: BFW (Bloomberg First Word)

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Martin Whetton (Australia & New Zealand Banking Group Ltd)

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