An Early Warning in Australia About `Tapering’

The Australian government’s 2-year bond has had an interest rate of 0.1%, but when the Reserve Bank of Australia on Oct. 26 announced the start of tapering off its quantitative easing asset purchases, the bond’s yield quickly rose to 0.25%. Then on Oct. 28, when the government issued 2-year bonds and the RBA in fact did not buy them, the yield rose suddenly to 0.50%. The next day, Oct. 29, it was at 0.65%.