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Economics
Central Banks

Investors Bet Australia Can Manage Soft Landing With High Rates

  • Aussie bond yield curves aren’t inverted, unlike some others
  • RBA trying to cool inflation while maintaining economic gains
Visitors on the steps of Sydney Opera House in Sydney, Australia.

Visitors on the steps of Sydney Opera House in Sydney, Australia.

Photographer: Brent Lewin/Bloomberg

Investors are betting one major central bank will successfully navigate the policy tightening required to cool inflation without sending its economy into reverse: the Reserve Bank of Australia.

Yields on long-dated Australian government bonds are about 40 basis points higher than their short-dated counterparts, a traditional indication of a healthy economy. By contrast, yield curves are inverted in Germany, the US and nearby New Zealand as traders bet interest-rate hikes will trigger recessions.