The analysts at Australia and New Zealand Banking Group (ANZ) offer their take on the Australian bond market performance.
Key Quotes:
“A mixed data picture emerged this week. Employment growth was strong while private sector wage growth disappointed and the NAB Business Conditions Employment index fell.
Even so, this is not a domestic economic backdrop that would compel the RBA to cut rates again in September, as it waits to see the effect of 50bp already delivered.
Concerns about the global backdrop have escalated. China’s activity and credit data for July was surprisingly weak, while Germany and the UK posted disappointing GDP figures.
Even with the US data surprises at their most positive since February, markets increasingly expect a deep easing cycle from the Fed.
With domestic factors in play, the AUD bond market will underperform on rallies and outperform on sell-offs.”
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