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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (19547)	10/7/2004 11:00:47 AM
From: russwinter	Read Replies (1) \| Respond to of 110194

Yes, actually taking the out months may very well be the way to go, as the implied interest rate is built into the backwardization. It's not exactly a strict backwardization such as what exists in copper and crude right now. Plus it would be much more liquid to trade (?), each contract represents A$100,000. Of course there is risk that interest rates may continue to rise even in Australia, which would widen the difference even more. Right now the one year appears to be about 2.5% per year. The yield on the bonds though is 4.3%, but less liquid and more expensive to trade for retail types like us. My theory though is that Aussie rates might see a little spike after the bogus release Friday, but that may be about it. I see no reason why Australia needs to offer 150-200 bps higher rates than the US, especially as the foreign CB support mechanism for the USD gets removed. I mean which country is really Oz? Forward rates various currencies, I'll put this on the thread header. ozforex.com.au