Investment Update - Nov 2016

I am not an economist nor interested in politics, however the recent election of Donald Trump has caused me to have deeper look at what the implications could be for Australian real estate in a new world where Trump tries new ways to spur on growth in the US. To start with I thought that I would review what has been happening with bonds - after all they reflect the markets view of inflation and interest rates. Government Bonds Prior to Trumps election, capital was continuing to chase quality yielding assets in safe markets as a “lower for longer” cry rang out across the globe. Australian Government Bonds were seen as a safe haven hand as the price of bonds was bid up, their yield has dropped. The illustration below shows the yield on Australian 10 year Government Bonds for the past 12 months. Having come down from a high of 6.5% after the GFC, yields were just under 3% 12 months ago and hit a low of 1.82% in August.