There’s great anticipation for today’s quarterly Consumer Price Index (CPI) announcement. A higher-than-expected rate will increase the chances of a rate rise, and some commentators think a lower number will increase the chance of a cut.
One data point shouldn’t see us lurching between hikes and cuts. It’s crazy. Is the current cash rate setting doing its job?
Monthly CPI readings show inflation rising with all groups’ monthly CPI rising over the last three months, 3.5% in March, 3.6% in April and 4% in May. Quarterly figures include more items in the CPI basket, so we will get a better indication today.
I suspect we may need at least one rise, if not two to get inflation back into the 2-3% range but will the RBA Board be willing to inflict more pain before we go to a Federal election? I’m not convinced.
Along similar themes, Robert Almeida from MFS Investment Management asks if we are asking the right questions regarding inflation. What really matters? Why might a central bank decide to loosen monetary inflation? This is a thought-provoking article and more about share prices but the message is important for all investors.
High yield bond spreads have been contracting yet Paul Benson from Insight Investment provides three reasons why you should consider high yield bonds.
Mark Humphery-Jenner from UNSW Sydney gives an excellent explanation of the ASIC investigation into ANZ’s alleged government bond manipulation. Humphery-Jenner makes difficult concepts easy to understand and there’s a great graph showing what happened to yields.
Matthew Macreadie of Income Asset Management discusses his Australian credit market strategy for the quarter and explains why subordinated debt is on his radar.
I love numbers, so it’s not surprising that I really liked the green bond article from Marion Le Morhedec from AXA IM Core. Le Morhedec quantifies the market and Australia’s role in this educational note.
