The RBA is not afraid of higher rates, Greece should be

The RBAustralia raised interest rates by another 25 bps to 4.25% as they move rates “closer to average” as growth is likely to “be around trend and inflation close to target over the coming year.” They have now raised 125 bps since Sept ’09 but this rate still remains 300 bps below the level of Aug ’08 right before the storm hit. The Australian$ is at an 11 week high vs the US$ in response and following is the Canadian$ which is back to parity with the US$ for the first time since July ’08. So where the US$ has been stronger against the euro, pound and yen, the story is different with the healthier economies with Asia and commodity exposure. Following the rise in treasury and MBS yields, said the avg 30 yr mortgage rate rose to 5.25%, the highest since Jan 11th. Greek bonds are getting slammed with the 10 yr yield up 39 bps to 6.92%, the highest since late Jan on talk that Greece wants no part of the IMF.

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