Australia's 18-Year Yield Premium Over Treasuries Disappears

Diverging central bank expectations eroding Aussie’s advantage
AUD/USD was at 0.5963 the last time the spread fell to zero

A ferry sails past the Sydney Opera House in Sydney, Australia, on Friday, April 29, 2016. Australia’s drive to balance the books will see the federal government’s debt pile top out within about five or six years and then start to shrink again, according to Treasurer Scott Morrison.Photographer: Brendon Thorne/Bloomberg

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By Stephen Spratt

February 15, 2018 at 7:05 AM UTC

This article is for subscribers only.

Australia’s yield premium over Treasuries vanished on Thursday for the first time since the turn of the century.

Treasury yields have jumped this year as traders repriced the pace of rate hikes by the Federal Reserve following stronger-than-expected wage and price increases. The Reserve Bank of Australia though has been at pains to signal that its policy will stay on hold.