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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
AUD
In the aftermath of yesterday's hawkish RBA hike and guidance, yield differentials have continued to trend back in the AUD's favour.
- The first chart below plots the yield differentials between AU and US government securities, across the 2yr, 5yr and 10yr tenor.
- The AU-US2yr spread is now back in positive territory for the first time in 2022. The change over the past month is an impressive +40bps over the past month.
- The spread at the 5yr and 10yr tenors haven't surged as much but still are close to cyclical highs.
The second chart shows AUD/USD against the 10yr differential.
- Visually, AUD/USD looks too low relative to the spread, but other factors are also at play, with higher risk aversion (VIX index) and softer commodity prices headwinds over the past month.
- Nevertheless, such strong yield moves are difficult not to be seen as helping stabilize A$ sentiment against the USD and on a cross basis.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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