With the short end of the interest curve in the US moderately increasing and the longer end not reacting, we’re seeing a flattening in the US yield curve.
The message this sends, is the bond market believes US rates will rise short term but the global economy is still fragile and inflation is low, therefor the prospects of longer term rate increases are quite low.
These events are helping to support interest rate sensitive names such as SYD and TCL.
SYD will pay a $0.16 dividend on the 29th of Dec and TCL will pay $0.26.
SYD is in the ASX 50 model and TCL is on both the ASX 20 and ASX 50 model.
We consider both names fully valued at current prices and recommend overlaying a covered call option to enhance the return.