Anthony Macdonald

So the slowing down seems to be working, but the economy's still got its issues, I think.

Yeah, James, while we end the week debating the outlook for the official cash interest rates, we spent much of it thinking about where rates are going in financial markets.

So bond yields, and they're the interest rates that governments offer to entice investors to lend them money so they can spend it on hospitals or schools, roads, statues of former Victorian Premier, your hero, Dan Andrews, James.

Yes.

I mean, these bond yields have been rising sharply right around the world, sparking fears that a red-hot share market could be set for a fall.

James, we talk about the share market a lot, but the bond market is actually a lot bigger and it's traditionally been seen as more important.

Can you tell us a bit about how the bond market works, why it's important and why everyone is so worried about those rising bond yields now?

100%.

That US 10-year rate that you talk about, I mean, that's the number one thing that fund managers would look at in Australia when they wake up every morning.

It is the number that sort of sets the tone for the whole market.

It's at 4.57% today.

Above 5% is very hard for equities.

That 4.57 has been rising recently.

But yeah, just generally, bond investors worry about inflation.

Equities investors look for growth.

Sometimes they're on the same page.

Sometimes they're not.

So we just kind of look at when that sort of flips.

between those two when they converge and when they get apart.

And at the moment, the bond investors are saying, hang on, let's worry about inflation.