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Yield Curve Control at neutral

RBA turns gas off on housing hot air balloon


1-Minute Read

So that party’s over then..

The market’s pricing min. 2%+ for 10 year government bond yields, so ergo, by proxy, average inflation for next 10 years is estimated at, at least, 2%.

That is a very steep climb, very quickly out of the covid dip on 10yrs seen at a low of 1% for most of 2020 and again at 1% just 2 months ago.

The current inflation bump is at around 3-4%, the question is for how long?

The bond machinations moves the RBA rate from .1% , at a guess, to ~1% by late 2022, maybe back up as far as ~2.5% by late 2023. Corresponding housing lending rates would be back in the ballpark of 3.75-4.75% p.a.

By abandoning yield curve control, if that’s indeed what it’s doing, the RBA has possibly just purposely turn off the gas on the ever rising hot air balloon that is the Australian housing market.

But of course ‘markets are human’ and just as unpredictable, so I guess we’ll just have to wait and see..

Buggered if I know 😛

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Online ramblings, both current and historic, by just another human bean