World’s Hottest Bond Market Fired by Defiance to Go Sub-Zero
- Australia bonds require less ‘leap of faith’ to buy, PGIM says
- Aussie-U.S. spread flipped to a premium in March on Fed cuts
A pedestrian walks past an entrance to the closed Reserve Bank of Australia building in Sydney on May 18.
Photographer: David Gray/BloombergThis article is for subscribers only.
One central bank’s refusal to contemplate negative interest rates is helping set it apart from developed peers and stoke interest in its world-beating bond market.
The Reserve Bank of Australia’s reluctance to contemplate life below zero is helping draw the likes of PGIM Inc. and JPMorgan Asset Management to the nation’s $482 billion sovereign bond market. Australia’s 10-year bond yield discount to Treasuries flipped to a premium in March as the Federal Reserve slashed borrowing costs, spurring bets U.S. rates would turn negative next year.