If there are concerns that Australia could be stripped of its prized AAA credit rating, it’s not been seen in the movements in Australian government bond yields lately.
Indeed, on the back heightened expectations that the Reserve Bank of Australia will follow up its May rate cut with further easing in the months ahead, along with benign global inflation and economic growth expectations and seeming endless desire for higher-yielding assets, the benchmark Australian government 10-year bond yield fell to the lowest level on record on Monday.
According to pricing from Thomson Reuters, Australia’s generic 10-year government bond yield fell to 2.214%, surpassing the previous low of 2.236% seen on April 2 last year.
It has since ticked higher, presently yielding 2.246%.
According to analysis from Bloomberg, Australian government bonds recorded the biggest gains among developed peers, after Greece, in the past month following the RBA’s May rate cut and significant downgrades to its medium-term inflation forecasts.