BlackRock sees short-term Australian bonds as too expensive, the fund manager's head of Australian fixed income said.
"I think where fixed income is looking exceptionally pricey in the short term is here in Australia," Blackrock Australia head of fixed income Stephen Miller said.
Asked whether Blackrock was selling Australian-dollar bonds, Miller said, "We've had that position reflected in our portfolio, yes. Having said that, and I'm literally talking the last week or two here, we didn't have much of position in Australian bonds."
"We thought markets were so egregiously priced, particularly in the very front part of the curve, that they were over-anticipating the prospects for an RBA [Reserve Bank of Australia] cut. We thought even if the RBA would cut, we found it difficult to believe they would cut in the order of magnitude that would validate current market prices," Miller said.
Early on Tuesday, the 90-day bank bill futures had priced in 150 basis points worth of easing by the RBA between now and the end of the year.
In the August minutes, RBA governor Glenn Stevens said the central bank board had mulled whether to raise the official cash rate, which stood at 4.75 per cent.
"There is a scenario out there where they might cut 150 basis points. I'm not saying it can't happen. I'm saying it's very unlikely to happen," Miller said.
On Wednesday, September three-year bond futures reflected about 75 basis points worth of easing, signalling a more moderate view of RBA monetary policy.
