Weekly Market Recap
Week in review
- Eurozone PMI services plunges to record low of 28.4
- U.S. unemployment claims surge to 3.3m
- U.S. government passes $2tn fiscal stimulus package
- China PMI for manufacturing
- U.S. nonfarm payrolls
- Australia retail sales
Thought of the week
One week into the RBA’s bond buying scheme and the pace has been fairly steady. Over the first four days the RBA has been purchasing on average $3.75bn in federal and state level debt. The majority, 87%, has been in government debt with only a smattering in state level financing. This may not sound like a lot, but if the RBA keeps buying an average of $4bn per trading day this would equate to approximately $80bn per month, or roughly 10% of outstanding government and semi-government bonds. While the program is unlimited and open ended, the bond market is already showing early signs of returning to normal and the pace and frequency of RBA intervention may slow. Especially if the 3 year yield stays close tothe0.25%targetdue tomarket forces. Steady as she goes on bond RBA bond purchases Daily long-dated open market operations .
Bonds' bad behaviour
Yield on Australian government bonds
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