Originally posted on Jan 6, 2008 on forex factory.
Originally Posted by TIckerShufflYou would think in the flight to safety people would be interested in Aussie Treasuries since the yield is so healthy compared to US bonds. Any comments on what might detract people from buying the Aussie simply for bond yields?
When people think of safety they think of the U.S. because it has the biggest economy and a strong military. While the media is all over the talk of a recession the U.S. economy happens to be extremely resilient. Again, the key world is safety, so people are not looking for the more attractive yield. They just want to know their money will be safe through any crisis.
There are definitely people still buying Australian bonds but the demand is just not enough to push the Aussie to new highs just yet. The environment is different from 7 months ago where the stock markets of the world kept making new highs and people were very comfortable to take on risks usually associated with higher yields.