Turnover in Australian bonds and interest rates markets in 2015 was $9 trillion. It is a vast market, bigger and meaner than equities, and the prices investors will pay for bonds can be revealing on the outlook for the economy domestically and globally.
The market moves in bonds don’t tend to be as dramatic as those seen in stocks, so they tend to grab less of the headlines. However, when there’s trouble brewing, bond markets can often flash the warning signs first — so they’re worth keeping an eye on.
With recent data showing the Australian economy gathering momentum, and some commentary from the RBA in the minutes of its monetary policy meeting this week putting a rocket under the Australian dollar, markets have been adjusting their view on when we’ll see the next interest rate move from Australia’s central bank — a question that’s vitally important for businesses and households across the country.
To talk through the market reaction and the implications for interest rates, we were joined on our economics podcast Devils and Details this week by ANZ fixed income strategist Martin Whetton.
We discuss the domestic outlook and Whetton outlines some of the key current considerations for debt markets.
You can find and subscribe to the show on iTunes, or you can listen in below.