yes, that type of analysis may give you some good clues... bond rates/yields/yield curves have proven to be some statistically viable ways of measuring the likelyhood of whether something is being valued "properly"
but, what if I told you it is absolutely 100% guaranteed already priced in, because I'm the chairman of the RBA, and I know my stuff.
My super informed, most qualified opinion won't mean a darn thing if a rate cut is announced, and the market tanks 300 pips in an hour.
BUt yet, if one just waits, and sees that once a rate cut is announced, that by the end of the day the market is actually trading higher...
well, the only way that can happen is if there are more aggressive willing buyers at those prices, and not enough willing sellers to fill them all.
Therefore, you can make an almost airtight, bulletproof argument that, indeed, it is priced in. AND.... it is also right now "cheap"... and thats why it has started to move up.
NOthing like logic and observation as the bedrock of a trading system.
X
but, what if I told you it is absolutely 100% guaranteed already priced in, because I'm the chairman of the RBA, and I know my stuff.
My super informed, most qualified opinion won't mean a darn thing if a rate cut is announced, and the market tanks 300 pips in an hour.
BUt yet, if one just waits, and sees that once a rate cut is announced, that by the end of the day the market is actually trading higher...
well, the only way that can happen is if there are more aggressive willing buyers at those prices, and not enough willing sellers to fill them all.
Therefore, you can make an almost airtight, bulletproof argument that, indeed, it is priced in. AND.... it is also right now "cheap"... and thats why it has started to move up.
NOthing like logic and observation as the bedrock of a trading system.
X