Bond rally rocket

Inflation gradually easing

The US rate of inflation over the year slowed from 6.4 per cent to 6 per cent in February, and is now well on the way back down from the peak of 9.1 per cent in June 2022. 

There have been some absolutely face-ripping moves in bonds over the past week, to the extent that markets think the rate hike cycle in Australia is now over and done with.

Indeed, markets have been intermittently toying with the idea of rate cuts over the coming months. 

Source: ASX

The driver for this has been the collapse of several banks in the US. 

In Europe, Credit Suisse failed to file its Annual Report on time - every accountant's nightmare - and has uncovered a material weakness in its reporting.

It would be a tremendous understatement to say that this is not great timing, and the cost to insure against default has skyrocketed alarmingly towards 1,000 basis points.

Needless to say the bank's share price has crashed to a new all-time low, down another -25 per cent today, and well over -75 per cent over the past year alone. 

The European banks index is tanking this evening, while BNP Paribas was also halted after its share price crashed 10 per cent lower.

The market jitters continue. 

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Australia's 3-year yield is trading way down at 2.8 per cent.

WTI Oil is below $70 for the first time since 2021 - which will at least be good news for inflation as demand drops away.