Before Wednesday, more than $14billion worth of government and other bonds become due. Some of that money will head back into the bank accounts of retail investors.
Craigs Investment Partners broker Chris Timms yesterday said there was only one new bond issue out in the market of $125million.
''All of this money is coming back to cash and there are no bond issuances. Retail investors who cannot invest somewhere else will put their money straight back into term deposits.''
The 90-day bank bill rate, still a key influence on mortgage rates, fell to 1.89% this week, the lowest rate for at least seven years.
With interest rates so low, usually some investors move money out of their bank accounts and into the sharemarket.
Mr Timms said interest rates were likely to stay lower for longer as there was no upward pressure on the Reserve Bank to increase the official cash rate from 1.75%. If the central bank did increase the OCR, the 90-day bills would rise.
Most people who had moved their money from term deposits to shares had been rewarded through capital growth and income through dividends, he said.
Asked whether banks would need to increase deposit rates to attract customers, Mr Timms said they were under no pressure to do so. With so much money due out into the market before Wednesday, a lot of the cash would move back to the banks by default.
That trend was likely to continue.
