Australia Bonds to Return 60 Percent More Than Treasuries, Westpac Says

(Bloomberg) -- Australian government two-year bonds will return 60 percent more than equivalent U.S. Treasuries in the next three months as both central banks surprise investors by keeping policy unchanged, said Westpac Banking Corp.

The Federal Reserve will keep rates on hold for the rest of 2007, going against futures markets pricing in a rate cut, said Damien McColough, chief debt strategist at Westpac. Traders see an even chance the Reserve Bank of Australia will lift borrowing costs by the end of the year, which won't happen, he said.


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