It’s been another historic day for Australian government bonds, with yields tumbling to the lowest levels on record, mirroring moves in Europe, the US and Japan over the past 24 hours.
This amazing chart, supplied by the Commonwealth Bank’s rates strategy team of Jarrod Kerr, Adam Donaldson and Kevin Xie, shows Australian commonwealth government bond (ACGB) yields dating all the way back to 1870.
Yes, that far.
“Yields have now crumbled to the lowest levels scribed in the history of mankind,” they wrote in a research note released last Wednesday afternoon.
“5-year ACGB yields just hit 1.55%, and are 145bps [basis points] below the lowest equivalent yield ever recorded in 1897 of 3%, according to Wray’s data.
“The entire ACGB curve is below any other low.”
Yes, it’s been a record-breaking day. And according to the CBA, there’s likely to be more to come.
“The 10-year ACGB yield of 1.85% is incredibly attractive. We are nothing more than a spread to the rest of the developed world. Negative interest rates, the threat of Brexit, and the thirst for yield are pulling Australian rates lower,” they say.
“The international interest in long-dated ACGBs is as strong as it has ever been, and unlikely to dissipate.”