**This is an extract from the Market Matters Weekend Report from 7 October. Click here to get access to the full report and more
Do bond yields remain the key?
Australia had our rate cut in October with another now expected by markets in the months ahead, this will take the RBA Cash Rate down to an amazing 0.5%. As subscribers know MM expects the next bout of local economic stimulus to be fiscal in nature as the RBA is clearly running out of any wriggle room from a classic monetary perspective as interest rates approach zero.
The US is now looking for a rate cut in 2019 following the weak manufacturing data last week. There is no major change with our outlook on US bond yields with fresh 2019 lows looking likely in the weeks ahead – ideally on a run for the safety of bonds as equities fall.
MM believes the bear market for bond yields is very mature but new lows will be seen in 2019.
US 10-year bond yields Chart