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Purpose: The importance of the financial cycle has become a central point of consideration for policymakers since the 2007-08 financial crisis. This study aimed to construct and characterize the aggregate Australasian financial cycle.

Motivation for the study: Financial cycles are complex, making them hard to measure and understand. This, in turn, makes financial cycles and the effect of fluctuations in financial cycles hard to predict and manage.Research design, approach and method: Principal component analyses were used to construct an index for these South African financial sections. The Christiano-Fitzgerald (CF) band-pass filter was used to extract cycles from these South African financial indexes. Finally, spectral density analysis was used to characterise the cyclical duration exhibited by each South African financial section. The time horizon of this study ranges from 01/01/1975 to 01/12/2017, a 42year period. Main findings:The analysis showed that the South African credit cycle has the longest duration among all the South African financial sections and has a duration longer than that of the traditional business cycle. The cycles of other South African financial sections provided no clear evidence of durations longer than the traditional business cycle. Furthermore, South African interest rate conditions and South African economic confidence measures exhibit the largest amplitude. Practical/managerial implications:The findings of this study can be used to enhance the efficiency of policies to manage cyclical fluctuations of important South African financial cycles and help other economic participants to anticipate cyclical fluctuations and thereby manage the potential effects of such fluctuations. Contribution/value-add:The results in this study therefore offer value to both policymakers and other economic participants, such as asset managers, who need to make decisions related to cyclical fluctuations in South African financial conditions.

Geopolitical risks and shocks such as military conflicts, terrorist attacks, and war tensions are known to cause significant economic downturns. The main purpose of this paper is to determine the dynamics between Australian sovereign bond yields and geopolitical risk. This is achieved by employing a quantile regression analysis. The findings of this study indicate that the impact of geopolitical risk on Australian sovereign yield dynamics is asymmetrical. Furthermore, an increase in geopolitical risk only impacts short-term yields at extreme regimes. However, the impact is, by and large, insignificant. On the other hand, an increase in geopolitical risk does have a statistically significant positive impact on medium- and long-term yields across most quantiles. Lastly, an increase in geopolitical risk tends to result in a steeper yield curve at the belly of the curve but causes the yield curve to flatten at the long end. This study is the first study that holistically examines the dynamics between geopolitical risk and Australian sovereign bond yields. The study thereby contributes to the body of knowledge on Australian bond yields, specifically, and adds to the sparse body of knowledge on the dynamics between geopolitical risk and sovereign bond yields. The findings of this study have implications for monetary policy makers, given that shifts in sovereign bond yields could impact all three core mandates of the Australian Reserve Bank. Furthermore, changes in the slope of the yieldcurve could be used by monetary policy makers to pre-empt changes in future economic growth. The results of this study also relate to fiscal policy formulation, given that yields directly impact the cost of government borrowing. Lastly, portfolio managers could benefit from the results of this study, as these results provide information on the ability of Australian sovereign bonds to hedge against geopolitical risk.

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