Australia In Focus : Let's Play Cricket
The only thing of interest onshore is perhaps the Australia vs India cricket test series. They will be playing their 4th test today.
Well, Australia is expected to win with their comfortable lead just as their bonds have outperformed India’s in the past 12 months. Indeed 10Y government bond yields made a historic low this week, touching 2.64% sometime midweek.
Taking a look at the global yield table, Australian bonds are the highest yielding in the AAA world, noting that NZ is a split AAA/AA, closing in on Singapore and trading at their tightest ever I can recall.
This has set a recovery in the AUDSGD that has been rising for the past 3 weeks, looking all likely to break the 1.10 mark next week.
My favourite news piece this week.
The average value of NSW land rocketed 11 per cent to $1.12 trillion in 2014, including big rises on the Central Coast and in Sydney, where new infrastructure projects has driven demand for housing and pushed some prices through the roof. http://www.heraldsun.com.au/news/nsw-real-estate-worth-an-extra-120b-after-2014-property-boom/story-fnii5s3y-1227179497742?nk=97a9e9f81642ab9f34a2ab26c977743e
It contrasts with Singapore’s struggle with falsified real estate valuations that has led to a lawsuit taken by UOB Bank against developer Lippo Group.
And we have “Values in Canada are 35 percent above the historical average relative to incomes and 91 percent higher when compared with rents. Prices in Belgium are 51 percent higher than the average relative to income, and in Australia 60 percent above the average relative to rents. ” http://www.bloomberg.com/news/2015-01-08/canada-home-prices-are-63-too-high-deutsche-bank.html
The expectations are still for an unchanged RBA in 2015 and rate hikes in 1Q16. http://www.businessspectator.com.au/news/2015/1/8/australian-news/cba-sees-rba-rate-rise-q1-2016
Calls for AUDUSD to drop to 0.75 cts is changing global investor views on the bonds which makes sense to me although I can hardly see the AUDSGD on the same trajectory. http://www.bloomberg.com/news/2015-01-06/aussie-drop-to-75-cents-seen-halting-bond-gain-australia-credit.html
I believe this is a good time to take the bets off the bonds, keep the currency on fixed deposit or a dual currency deposit to enhance returns, and wait for better entry levels. Some of the beaten down stocks also offer good investment opportunities.
Happy cricket weekend !
Leaving with the indicative prices of the bonds.