Like I mentioned before, there is a great likelihood there will be no rate cut for big 4 customers. The risk factors are pretty simple to understand, but not that nice to think about if you want lower rates.
1. We had a gfc.
2. The government initiated a lot of stimulus spending that resulted in a massive credit spike.
3. Credit spike funded by banks selling bonds to OS investors.
4. OS investors scared about GFC, so maturity for bonds to be refinanced much shorter timeframe than usual (normally 5 to 10 years, average about 2.5 years instead.
5. Banks thought times would be better for os credit markets in 2.5 years from 2008. They really took a gamble there. If you print money to get out of trouble, you usually delay and worsen the eventual meltdown. Things are looking bad to worse for our banks being able to refinance this major spike in loans.
6. The Rba's cash rate has got nothing much to do with the cost of refinancing all of these bonds. Local savings are a drop in the ocean and cannot refinance these bonds.
7. Anyone who hopes a Japanese banking tsunami will save the market has never looked at the cost of hedging fx risk.
- Forums
- Property
- rate cut next month a 'done deal'
rate cut next month a 'done deal', page-23
-
- There are more pages in this discussion • 19 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)
Featured News
AVH
Avita boosts skin restoration product portfolio with 'dermal matrix' – a kind of next-level gauze made of fake skin
GML
Gateway Mining sells WA Eastern Montague gold project to Brightstar for $14M – half of that in shares
Featured News
GML
Gateway Mining sells WA Eastern Montague gold project to Brightstar for $14M – half of that in shares
STX
Strike hands $48.5M contract to Clarke Energy to produce 20x 4.5MW gas engines for Sth Erregulla
MND
Albemarle lithium downsize burns $200M hole in Monadelphous's pocket as latter's contracts terminated