What remains frustrating is the knowledge that the Australian government has vastly more fiscal room for manoeuvre than others, and the right strategy would be modest rate cuts and easier fiscal policy. That would send the AUD significantly higher but, sadly, is unlikely.

Still, with stronger growth than the US next year (and stickier inflation) the RBA is likely to cut rates significantly more slowly than the Fed, and more slowly than is currently priced into the forward curve. That should allow 5-year AUD yields to get back above US 5s on a sustained basis and drag AUD/USD back into the 0.69-0.75 range it was trading in when that last happened.

The problem for bond investors though, is that this may mean the curve remains inverted for the vast majority of 2023.