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

June 21, 2012

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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:

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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.

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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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