credit spreads from the rba

Some info on interest rate spreads which can inform upon the length of the current credit crisis somewhat.

Credit spread graphs, RBA


Interpretations:
Page 1. The Australian 10 year bond rate has dipped below the cash rate. This is bad for the AUD, and clearly planned by the RBA to devalue the dollar vs the USD. prognosis: rate cuts will barely offset this, and the AUD will devalue. Good for resource producers, tourism, exporters.
Page 2. the US bond rate has broken a downward trend started June 07 and ended April 08 - the US dollar is only going up if this continues. Not good for gold.
Page 3. Corporate bond yields (debts). Clearly, looking at the bond spreads, there's a large expectation of more pain given the bond spreads remain high even though yields have dropped in advance of an expected rate cut (ie; no selling today's rate fixed forward for 3 years when you can expect to sell off lower rates in a month or two). Also, note that A and BBB corporate bonds have both exploded equally - there is no distinction in the market between good and bad debt. All debt is bad. hence the parlous state of the banks.