Recent developments in Australian bond yields

Benjamin Ford and Karen Taylor
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Benjamin Ford: Treasury, Government of Australia
Karen Taylor: Treasury, Government of Australia

Economic Roundup, 2005, issue 4, 111-120

Abstract: The yield curve typically slopes upwards as bond investors require higher interest rates to hold bonds of longer maturities. For most of 2005, the Australian yield curve has been close to flat, or negatively sloped. The traditional interpretation of such a development is that the bond market expects lower future short-term interest rates and weaker future economic activity. However, this conclusion is at odds with the recent performance of the Australian economy and the outlook for 2005-06. The paper argues that a combination of domestic and international developments have suppressed long-term bond yields.

Keywords: bond; yields (search for similar items in EconPapers)
JEL-codes: E43 G12 (search for similar items in EconPapers)
Date: 2005
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