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I could see a W happening, based on what Australia did two weeks ago. this was done not only to tame inflation, but maybe to get people to buy their bonds when the market goes down. If they keep raising their cash rate, consumers anticipate higher inflation which causes them to save more and will force Australia to raise their bond yields to attract investors. When the market crashes consumers are going to look for a safe investment--government bonds. Australia's high ytm+coupon will be the most attractive.

the AUD has been depreciating to others, but this will turn around once the market tanks.

I also like this premise because Australia said they plan on raising the cash rate even more, which to me signals the market is headed up for another intermediate term.

Kent @ The Financial Philosopher

Thanks for the Aussie insight! I'm no expert on spending and saving habits but I would guess the opposite result in America. If Americans anticipate higher inflation, they might be more inclined to spend (rather than save) so they can buy their goods now at lower prices!

Thanks again for the comment...


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  • Kent Thune is a wealth manager, a writer and a philosopher... Read More


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