Pacific Investment Management Co. said the Aussie dollar’s strength as a consequence of global monetary policies may mean short-term Australian interest rates remain lower for longer. UBS AG sees the central bank holding borrowing costs at a record low through the end of next year.
Australia’s dollar touched four- month highs versus the yen and the greenback as U.S. lawmakers voted on a deal to end a government shutdown and raise the debt limit, bolstering demand for riskier assets.
Australia’s central bank will probably have to cut interest rates again as a record resources- investment boom fades, according to Pacific Investment Management Co., which runs the world’s biggest bond fund.
Australia’s dollar traded near the highest in almost three weeks before data forecast to show domestic job gains and after the White House said Federal Reserve Vice Chairman Janet Yellen will be nominated to head the U.S. central bank.
Asia’s stronger balance sheets and better economic outlook will see the yield premium investors demand to own the region’s debt versus U.S. bonds shrink, Pacific Investment Management Co., manager of the world’s biggest fixed-income fund, predicts.
Pacific Investment Management Co. says Australian debt markets are misguided to bet the central bank is almost done cutting interest rates, as the economy will struggle to cope as a resource investment boom fades.
Australia’s central bank may need to cut record-low interest rates at least two more times as mining investment peaks and slowing growth in China damps exports, said Pacific Investment Management Co., manager of the world’s biggest bond fund.
Bonds backed by Australian home loans offer value as returns outweigh the risk on notes that are “close to bullet-proof AAA,” according to Pacific Investment Management Co., manager of the world’s biggest debt fund.
Pacific Investment Management Co., which manages the world’s biggest bond fund, is buying Australian notes backed by home loans in the secondary market to profit from higher yields as European investors dump the bonds.