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Monday, 2 March 2020

The long slow march to zero (Part X)

Rates to fall

A rate cut tomorrow is all but a done deal, according to market pricing.

In fact, markets are pricing a 128 per cent chance of a cut at the time of writing.

Source: ASX

In other words, beginning to price in the risk of a greater than 25 basis points cut.

Most likely it'll be 25 basis points, according to observers, with a follow up cut quite possible over the coming months.

Australia's 3 year bond yield has fallen to the lowest level ever at 0.35 per cent.

Even the 10 year bond yield has hit a record low 0.71 per cent.

Whether this month or over the coming months, we're heading for an era of record low rates...