 Markets are trading with Tim Larkworthy from FIG Securities. Tim thanks very much for joining us. Now tell us about US bond yields because they're flat aren't they at this kind of lower end of the Trump post-election trading range? Yeah that's right Helen and look I think overall interest rates are holding as you say towards the bottom of the recent range. Not quite as low as they got to in April but certainly holding what has been a low level overall. I think as you point out it's pretty much an acceptance that the market overall has now concluded that the Trump factor in terms of his ability to cut red tape, introduce tax cuts and to increase infrastructure spending is likely to meet a heavy gridlock in Washington and as such yields are holding lower as a result. Yeah so what are they at? Ten-year US yields are holding at the 2.25 not quite as low as the 2.17 level they were in April but still very much towards the bottom of that range and I think the the risk is if they were to push down and and break that 2.17 level that would be a strong technical indicator that the likelihood is that the the rates are going to move lower. Yeah now what about the the seven-year notes? Well they had an auction last night Helen which went very well they issued $28 billion worth of bonds and that was at a yield of 2.06 which was the lowest they've had since February which just shows that I think that there's strong demand for US dollar bonds overall still. Yeah so it's interesting there's strong demand and yet there seems to be perhaps a when you said a gridlock do you mean that's a negative sentiment? No it's more just the the ability of Trump to get his legislation through the Congress. Yeah but I mean that surely that engender is a kind of a negative sentiment that everything that was promised may actually be very hard to deliver. Yeah absolutely and and if you remember when Trump was first elected yields rose quite sharply in other words prices came off and as a result of that we saw the the 10-year US yield get to a high of 2.6 now that was based on the premise that the economy would be stimulated by the Trump legislation but that looks as though that's not likely to happen this year it may happen next year but it's not happening this year so that the market is adjusting for that. All right so they haven't given up hope completely they just think the gridlock may be there and that it may be delayed. Absolutely yes I think that's fair. Yeah so the FOMC minutes released earlier this week what did they show for you? Look I think it shows that the committee is starting to look at the possibility of unwinding some of the the 4.5 trillion dollars that they accumulated on the balance sheet since the GFC. Yeah so sort of shrinking it really. Well yes it's look I think the the real detail of that is yet to be declared but obviously there's a lot of stock to unwind from the balance sheet and the risk has always been that that will have a negative impact on markets so I think the market will be watching it very closely to see what sort of agenda they have and how they intend to do that. Exactly well when you say the Fed you know might gradually unwind this four and a half trillion dollars balance sheet how does it do that? I mean that's been accumulated since the GFC hasn't it? Look it certainly has and that's where the jury's still out and I think until we see the the real color of the money if you like of how they propose to do it the market will be fairly cautious it's early days we still haven't seen the color of the the full color of the detail of this. Yeah okay so how is the market sort of approaching that are they happy with it comfortable with it or not? Well I think at this stage they're comfortable with it but so because I think the market realizes at some stage they do have to unwind the start unwinding the balance sheet it can't stay there forever but again as I said I think it'll be more in in the detail as we as we see it later on that will really give the market confidence. All right yeah sorry Tim just that June hike still very much on track? Yes look this time last week the market was pricing in a 65 percent chance of it occurring that's now back up to 80 percent I think we can pretty well lock that one in if the Fed decided that the market was misinterpreting their intentions I think they would have flagged flagged that by now so I think we can lock this one and the interesting thing will be what they do further down the track I think if at this stage it looks as though September is a is a mild possibility and then possibly December after that but maybe the market's readjusting to the prospect of only one more after June. All right and what about Aussie yields do they always follow the US? Look not always but in recent times there's been a strong correlation so I think you know as long as the US is holding yields at the lowest the lower end of the range we'll probably align with that and as I said I think the risk is if the market were to move through these technical levels then then we'll also move lower overall but the 10-year yield in Australia at 2.43 is is holding pretty steady at the moment. Yeah and the Aussie dollar? Last I saw it was in the mid mid 74s and I think it's again it's it's caught in a fairly tight trading range at the moment. All right Aussie issuance what's going on there? The Liberty Financial had an issue earlier in the week which went very well they raised a total of $200 million at a yield of or a coupon of 5.1%. I think the the expectation prior to the S&P downgrading that would trade at a margin of 2.75 but with the S&P downgrading it just increased to 3.25. Yeah okay so sorry where will that that was following the S&P downgrade? Yes there was an S&P downgrade across 23 banks earlier in the week and that impacted Liberty as well and as such the the spread blew out marginally from the the 2.75 guidelines to the 3.25 it eventually was issued out. All right Tim Larkworthy from FIG Securities thanks so much for joining us. Thanks for having me Helen. Well that's all we have time for