Forex News Expect Australian bond yield curve to hold current levels though significant further reduction in inverse shape unlikely in near term, Westpac senior interest rate strategist Damien McColough says. Adds holding steepeners is "correct trade" but cautions extended cyclical steepening will not gain momentum until "RBA rhetoric turns dovish" which is "some time away." Bigger question remains whether curve can move sustainably into positive territory. "We would baulk at recommending that in the near term." Notes any domestic inflation fears will be reflected at short-end while offshore buying will support long end. 3-10 year yield spread last -8.5 bps.
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