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AUSTRALIAN 10-YEAR BOND YIELD DROPS TO RECORD LOW AT 2.22%
Most wish it was a growth story, but there’s little faith in the global economy.
Since February, emerging market asset prices have been supported by two factors, both of which will prove fleeting.
Up until May 3rd, Janet Yellen had her foot on the US Dollar’s neck, while the PBOC expanded credit in China at the fastest pace since 2009. The dollar index DXY plunged 6.7% between March 2nd and May 3rd. In a reversal, as the dollar surged emerging-market currencies fell for seven consecutive days through Friday, the longest losing streak since March 2015.
If global investors really trusted China’s recovery, they wouldn’t be piling into Aussie 10s at 2.20%.
Bloomberg’s monthly gross domestic product tracker for China shows growth slowed to 6.88% in April, from 7.11% in March.
Growth is likely far slower, 1-2% at best.
Weak steel and coal output dragged on industrial production, which increased 6% from a year earlier versus economists’ forecasts of 6.5%, while retail and investment readings also disappointed.
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