We have a problem with housing. Yesterday the Monetary Policy Board minutes revealed members considered the risks to housing if rates were cut.
“Historical experience both in Australia and abroad suggested that periods of lower interest rates can coincide with riskier borrowing activity, a rapid increase in house prices and, at times, a relaxation of lending standards,” the minutes read.
Both major political parties’ housing announcements this week only diminished their credibility. We desperately need our politicians to collaborate to cut red tape, increase supply, include mandated allocations for social and inclusive housing in new high rises, make choosing a trade more attractive and limiting negative gearing and capital gains tax deductions.
Higher interest rates have implications for businesses as well as first-home buyers. The Monetary Board Minutes also noted insolvencies are rising. There are growing calls for a cash rate cut in May, with Sally Auld, NAB Chief Economist, calling for a 50 basis point cut.
Concerns over stagflation, that is rising prices and slowing growth, is mounting. Andrew Lakeman from Atlantic House has penned an excellent article providing suggestions for financial advisers on how to help clients during challenging stagflation environments.
Benoit Anne from MFS Investment Management is back with another insightful article about confidence and credibility and the triple whammy of treasury, equity and currency market sell offs.
The very popular monthly global asset class allocation review is back from Thomas Poullaouec of T. Rowe Price, who gives clear directions on his view of equities, bonds and cash.
Bonds may be far better positioned than equities or cash to weather or even benefit from serious market downdrafts, according to Robert Tipp from PGIM Fixed Income.
Jay Sivapalan and Emma Lawson from Janus Henderson favor investment grade corporate bonds in this environment, which they state are well-funded, profitable and resilient. Further, the expected 100 basis point Australian cash rate cut, should support the market.
Finally, Michael Goosay from Principal Asset Management wrote a terrific piece last week stating Trump’s Liberation Day speech has forced investors to look outside the US for safe-haven assets.
We hope you have a relaxing and peaceful Easter break.
Updated ETF Finder
Just a reminder that we’ve updated our ETF Finder to help you in your search for fixed income investments. There are now 85 ETFs available with very different characteristics. We have classified them by sector and by geography and listed a few positives and negatives as well as past performance and yields. In my article, I also outline the best and worst performers over the year and what I found interesting.
