It’s too early to call an end to the great low-interest bond bubble. But interest rates on US 10-year Treasury notes have risen sharply in the leadup to a forthcoming Treasury auction. It’s hard to see how the US can restore balance on the trade account (as it must) without a significant increase in interest rates as well as a depreciation. And if US rates rise, there’s likely to be a flow on from Australia.
However, the Asian central banks that have been keeping both us and the Americans afloat still have plenty of buying power, and this could easily turn out to be another false alarm.
John Quiggin 
When the Chinese decide to stop distorting their own economy with their fixed exchange rate we will all be in for a wild ride, but you are right, it may take a while.
Personally, I can’t wait – the global economy has been pretty boring recently. It has been doing the things it should be, like raising people out of poverty, improving trade, increasing economic (and therefore political) freedom etc. etc. etc.
Can’t see China getting too sensible while run by a group of dictatorial, old, arch-conservative illiberals, though, but when they collapse it is going to be a beauty. Much more fun than Russia and the old Eastern Europe.
Why is a fixing the exchange rate any more distortionary than a fixing the interest rate? If anything, it’s far less distortionary. We should avoid taking cheap-shots at China until we have our own house in order.
Degustibus non disputandum est.
Always pleasurable to watch authority torn down, especially if it’s unrepresentative authority.
If only it could happen without blameless people being hurt. Stalin’s quip about eggs and omelets comes to mind. Does it matter which eggs are being broken? Probably not.
It is widely accepted that countries get the politicians they deserve.
Is it equally true that people get the economy they deserve?