Beware buoyancy in bond markets.

Australasian Business Intelligence, July, 2003

Jul 16, 2003 (The Mercury - ABIX via COMTEX)

Australian bond yields increased by more than 0.25 on 16 July 2003. The Commonwealth Government May 2013 bond yield increased to 5.35 and the US 10-year yield rose to 3.98 after the Federal Reserve Board chairman, Alan Greenspan, expressed optimism about a US economic recovery. Analysts said sellers should be cautious, especially if Greenspan is prepared to reduce interest rates again to facilitate economic growth. Many analysts believe that the US may not proceed with another rate cut, but that a reduction must remain on the agenda in Australia. Ausbil Dexia's chief economist, John Honan, said Greenspan needs to give the market reason to keep bond rates low to guarantee an economic recovery.

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