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Disclaimer
BY CLICKING ON “I AGREE”, I DECLARE I AM A WHOLESALE CLIENT AS DEFINED IN THE CORPORATIONS ACT 2001.
What is a Wholesale Client?
A person or entity is a “wholesale client” if they satisfy the requirements of section 761G of the Corporations Act.
This commonly includes a person or entity:
who holds an Australian Financial Services License
who has or controls at least $10 million (and may include funds held by an associate or under a trust that the person manages)
that is a body regulated by APRA other than a trustee of:
(i) a superannuation fund;
(ii) an approved deposit fund;
(iii) a pooled superannuation trust; or
(iv) a public sector superannuation scheme.
within the meaning of the Superannuation Industry (Supervision) Act 1993that is a body registered under the Financial Corporations Act 1974.
that is a trustee of:
(i) a superannuation fund; or
(ii) an approved deposit fund; or
(iii) a pooled superannuation trust; or
(iv) a public sector superannuation scheme
within the meaning of the Superannuation Industry (Supervision) Act 1993 and the fund, trust or scheme has net assets of at least $10 million.that is a listed entity or a related body corporate of a listed entity
that is an exempt public authority
that is a body corporate, or an unincorporated body, that:
(i) carries on a business of investment in financial products, interests in land or other investments; and
(ii) for those purposes, invests funds received (directly or indirectly) following an offer or invitation to the public, within the meaning of section 82 of the Corporations Act 2001, the terms of which provided for the funds subscribed to be invested for those purposes.that is a foreign entity which, if established or incorporated in Australia, would be covered by one of the preceding paragraphs.
Fixed income
Inverted yield curve
A yield curve represents the relationship between bond yields – interest rates – of bonds with the same credit quality across different maturities, at a specific point in time. In short, it indicates what it costs to borrow money over time. It is a graphical representation of the term structure of interest rates, and reflects market expectations of future economic conditions and changes in interest rates.
The yield curve historically has been upward sloped under conditions of normal or positive economic growth. That is, long-term yields typically are higher than short-term yields, owing to the so-called maturity risk premium: lenders demand higher returns on long-dated debt to compensate for the uncertainty of holding debt instruments for longer periods of time.
At certain points in the economic cycle, yield curves flatten and can even slope downwards. A downward- or negatively sloped yield curve is referred to as an inverted yield curve.
A long history of innovation
What drives this slope inversion and why is it such a closely watched phenomenon? Market watchers tend to fear yield curve inversion, as it historically has been a leading indicator of economic recession. When economic growth deteriorates and investors believe a contraction is looking, they would be wary holding debt on the shorter end of the maturity spectrum. This is based on the view that companies and government agencies may have more difficulty servicing debt in the next two to five years, say. As investors shun short-term debt in favor of longer-term debt, short-term yields rise and long-term yields decline. The result is a downward-sloping yield curve.
The US Treasury yield curve is an example of a yield curve that is used extensively in practice. It plots the yields on instruments issued by the US government, ranging from one-month bills to 30-year debt. A much-watched portion of this yield curve is the two-year-to-ten-year curve. Changes in the slope of this curve is considered a leading indicator of turns in the US economic cycle, which has repercussions for global markets.