Analysts at Goldman Sachs argue that the Australian yield curve could flatten in the near-term, as the investors are pricing in too much at the front end of the curve, in light of Australia’s 10-year bond yields having dropped to a record low earlier today.
Key Quotes:
“With the unemployment rate at decade lows at 4.9% we continue to think the market is discounting too much at the very front end. The RBA may eventually be drawn into a cutting cycle should data deteriorate from here, but relative to current pricing we think risk-reward favours curve flatteners.”
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