Evidence of a US slowdown has seen global share markets tumble. Is this the start of something more serious or just increased volatility that we’ve been expecting? Global share indices are all down, albeit the S&P 500 finished in positive territory overnight, up 1.04%. At home, the ASX200 is down 3.43% for the week, negating much of 2024’s gains to date.
Guy Steer from Amundi Investment Institute provides three reasons that have contributed to the shift in sentiment. Steer suggests heightened volatility may warrant reducing risk exposures as a precautionary measure.
Government bonds are providing a hedge for equity losses with bond prices rising and yields falling, as investors begin to factor in a recession and look for safe-haven assets. The US 10-year government bond yield fell to 3.8%, before a slight uplift to 3.893%.
Two articles this week consider the case for bonds. RJ Gallo from Federated Hermes demonstrates that bonds maintain higher income levels following US Fed rate cuts and extending duration can offer a more consistent income stream over time.
PGIM’s Gregory Peters and Tom Porcelli have written an excellent article, believing rates are in a strategic buy zone.
Daniel Grana from Janus Henderson considers what a Trump Administration might mean for emerging markets, while Seema Shah from Principal Asset Management says it’s the starting yield that matters when investing in high yield markets and not the credit spread.
The RBA has kept the cash rate on hold and the RBA Governor has said not to expect any rate cuts in 2024, which will be a blow to mortgage holders, but a godsend to retirees relying on deposit interest to make ends meet. Jonathan Kearns from Challenger takes a deep dive into current inflation numbers and finds persistent domestic inflation is in part to blame.
Emma Lawson from Janus Henderson is back with her Australian Fixed Income monthly round up – a must-read for domestic investors.
Finally, Macquarie Group has announced it is considering a new capital notes offer, but there is no guarantee the offer will proceed, you can read the press release here.
