The presentation discusses the behavior of asset market pricing, focusing on fixed income securities. It explains the relationship between house prices, interest rates, and mortgage loans. It also explores the impact of inflation on government bond yields and the distinction between risk assets and fixed income securities.
Highlights
House price cycles and auction clearance rates are influenced by interest rate decisions and loan-to-value ratios.
The affordability of housing is affected by changes in interest rates.
Asset price bubbles can occur when there is low or zero-cost borrowing, leading to increased demand for assets.
Government bond yields are influenced by inflation expectations and risk factors.
Fixed income securities provide a fixed return, while risk assets carry higher risks and uncertain returns.
Emerging markets tend to have higher bond yields due to increased risk and inflation.
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