Salient to Investors:

The median economist expects Australia’s government bonds to beat Treasuries for a third year in 2013

Robert Mead at Pimco said the new normal is finally catching up with the Australian economy – the RBA will keep Australian interest rates low. Mead strongly recommends Aussie bonds as an effective anchor in balanced portfolios.

As many as 26 central banks hold the Aussie currency. Australia has AAA rankings and stable outlooks from all three major rating companies, joining Canada, Denmark, Norway, Sweden, Singapore and Switzerland. The IMF said Australia, Japan, Switzerland, and the US have a particularly safe investor base.

Bin Gao at Bank of America said Australian bond yields are attractive and sees central banks continuing to buy.

Interest-rate swaps trading indicates a 56 percent chance the RBA will cut the overnight cash-rate target to 2.50 percent or lower by June, versus the all-time low of 2.89 percent in January 1960.

Australia & New Zealand Banking expects the RBA to cut to 2 percent by the end of 2013. Adam Donaldson at Commonwealth Bank of Australia expects 2.5 percent or less.

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