The RBA Board cut the cash rate yesterday from 4.35% to 4.10%, a big relief to the one third of Australians that have a mortgage. However, it was a sad day for retirees reliant on deposit income. Society seems to forget about them. It may be many months before we see a second cut, it will all depend on the data.
What’s in store for the local bond market? Andrew Canobi from Franklin Templeton says not to expect a bond rally, the cut was already priced into markets. The insightful piece explains current strategies and a discussion of the important ‘neutral rate’.
This morning, Macquarie Asset Management launched two new fixed income ETFs, while last week Janus Henderson also announced a new ETF, all three are actively managed funds.
Shock new US inflation figures last week now has many commentators thinking the US rate-cutting cycle may be over. Jeff Schulze from ClearBridge Investments says travel-related categories saw large pickups indicating a healthy consumer and the rate will put pressure on long term interest rates and downward pressure on equities.
T. Rowe Price regularly publishes their global asset allocation views, and it’s consistently read by our subscribers for its reasoning. This one is no different. While its focus is equities, read through to the end where it covers bonds.
For those investors concerned about declining interest rates, Chris Iggo from AXA Investment Managers, thinks bond income returns could potentially be higher in 2025.
ANZ has announced its Capital Notes 5 will be redeemed and with the phasing out of hybrids, not be replaced. The many fixed income ETFs available may provide an alternative.
Finally, we have a very good article from Arif Husain from T. Rowe Price about how US immigration changes could impact inflation. I was surprised by the numbers, it’s well worth a read.
Have a good week!
