Yields

Yields have been quite volatile of late as traders continue to try and second guess the economy and the RBA. Consequently the yield curve have moved down about 10 to 20 points from 1 yr to 5 yrs today. Over the next two years we are looking about a 2% rise in the cash rate to 5%. The economy will in my opinion recover very slowly (unless China's growth explodes) so it will take some time to get there. If that's the case the rise in rates is already priced in with some institutions offering 2 year returns of near 6%.