Yield Curve in Australia Portends Trouble, as it Did for India and Brazil

June 21, 2012


On June 11, 2011, I wrote a post entitled: “Yield Curve Bodes Ill for Indian Rupee and Brazilian Real, Suggests Research.” Let’s take a look at what’s happened since:


Ever since August 2010, when I first mentioned how the Chinese were helping blow a bubble in Australia, I’ve been consistently bearish on Australia due its dual bubbles. The yield curve had been relatively flat (5.3% at the long end minus ~ 4.85%) as of May 2011, but not yet inverted.


However, the yield curve is now inverted at short end. Expect Australia’s economy and currency to deteriorate based on this measure and amid deflating bubbles.


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