Investors find safety in the arms of treasury bonds

Roni Green from GF Asset Management provides insight into the inflation rate and bond markets in both the US and Australia.

According to the US year-on-year number, inflation sits at around 3% and core prices are lower. Roni touches on possible volatility in inflation which might seep its way into bond markets due to some concerns going forward. Roni points to a clear trend of inflation being on a downward path globally and argues that the bond markets are saying that both the Federal Reserve and the Reserve Bank of Australia are planning to bring inflation back to their target ranges.

Speaking on Australia's economy, Roni highlights that the Reserve Bank of Australia has not raised rates as high as other central banks and draws attention to weakening retail sales. Roni recommends skewing more towards government risk to take advantage of high risk-free yields while being careful on the credit side given its current expensive state. Roni also expresses the belief that the risk-reward from having a lot of credit exposure is not favorable at this time. Roni draws attention to the expensive high yield markets, particularly in the US, and notes the lack of compensation for high yield risk. He suggests that this period might not be the best time to take such risks.