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Flood of global liquidity depresses Australian yields

Friday, February 13, 2015 - 05:50
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With core inflation at 2.2 per cent in Australia, 10-year paper offers a real annual return of just 30 basis points. Lend for three years, and it will cost you 20 basis points when adjusted for inflation.

Sydney

WITH sound finances, robust banks and buoyant Chinese demand for its commodities, the returns that made Australia a magnet for investors are buckling under the weight of negative yields elsewhere.

Foreign funds have poured money into Australia, the only advanced economy to

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