Fitzsimmons: 'Striking' value in Australian govt bonds

Australian government bonds are yielding 5.5% with a high level of credit quality, offering ‘striking' value in a world of low interest rates and low bond yields, says Quentin Fitzsimmons at Threadneedle.

The head of government bonds and foreign exchange says the attractiveness of the Australian government bond market is due to the central bank raising interest rates for a considerable period of time, in contrast with the UK and Europe. He says the 5.5% yield and high credit quality may be a surprise to investors, in contrast to the scramble for yield in parts of the emerging market fixed income universe. In the fixed income markets more generally, he says the prospect of low yields and rising interest rates pose a threat to medium-term returns. "In the second half of this year, alt...