Whilst current inflation is low, so are the returns on many low risk assets. This means inflation can still absorb a large part of returns and historically, this can be quite unpredictable.
Recent events have pushed both inflation expectations and bond yields to long-term lows, so should investors still worry about inflation?
Moody’s has recently commented that Australia’s “AAA” sovereign rating could be under pressure, notwithstanding the current stable outlook.
With the festivities behind us and a new year ahead it is a good time to reflect on what to expect from fixed interest markets. More of the same, or will the end of zero interest rates in the US bring something different?
Bond yields across the major fixed income markets are currently at low levels relative to history, causing investors to question whether the asset class can continue to deliver an attractive return.
Thinking uncertainly vs thinking volatility. These two market views are creating something of a conundrum in interest rate markets at the moment.
APRA yesterday announced a series of new measures aimed at reinforcing sound lending practices by financial institutions in Australia.
In recent months macroprudential measures have increasingly been under discussion in Australia. The Reserve Bank of Australia and other regulators now appear open to the adoption of such tools.
Increasing issuance of inflation linked bonds in New Zealand has resulted in a NZD 14 billion market, accounting for close to 20% of the NZ government bond market. NZ ILBs offer an attractive real yield and a low entry point for breakeven inflation.
Over the first half of 2014 financial markets experienced a significant decline in bond yields, with a correspondingly strong period of performance.
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