The Monetary Policy Board (the new name for the RBA cash rate board) left the cash rate on hold this week at 4.1% as widely expected. The market is anticipating a rate cut at the next meeting in May.
There’s plenty of uncertainty in markets with Trump due to announce ‘Liberation Day’ tariff policies tonight. Governments and markets are unsure which countries and industries will be hit hardest and what impact tariffs will have on prices and ultimately inflation.
Will inflation rear its ugly head once again?
PGIM Fixed Income have extrapolated the tariff numbers in a very interesting article. They also outline expectations for developed market interest rates with potential upside for fixed income assets.
Whatever happens with tariffs, Australian pundits expect at least two interest rate cuts this year and Janus Henderson’s Emma Lawson, in her monthly summary of the Australian fixed income market, expects four in the cutting cycle, taking our rate to around 3.35%.
I interviewed Adam Whiteley last week. He’s Head of Global Credit from Insight Investment. We covered such a lot of ground, including whether credit is expensive, why it’s important to think globally and why he’s not investing in private credit.
Primary Markets is cautioning investors about private credit and the difficulty in assessing credit quality.
Finally, we have a great article from economist Seema Shah from Principal Asset Management on Germany’s fiscal shift and the start of European exceptionalism.
There’s been two new corporate bonds in the over-the-counter market this week and one that was withdrawn:
- Coles raised $300m in a 7.5 year senior unsecured fixed rate deal. The coupon was 5.546% or 145 basis points over semi quarterly swap
- Aurizon mandated 30NC5.25 subordinated notes in a fixed to floating and/or floating rate tranches
- Worley was touting a seven-year fixed rate senior unsecured deal, but decided not to proceed due to market volatility
Bendigo and Adelaide Bank, Resimac, Suncorp, Allied Credit, BC Securities and AMP have all been active in the asset-backed securities space.
Have a good week!
