Market Update 5 November Investment markets and key developments over the past week In the past few weeks, financial markets have been pricing in aggressive rate hikes from the major central banks over the next year because inflation data has been surprising on the upside. However, this week numerous central banks banded together and pushed back against market pricing which led to a fall in government bond yields, particularly at the front end of the …
US political protests, inflation and rising bond yields Key points US protests are only an issue for investment markets if they significantly impact economic activity. Global and Australian recovery will boost bond yields and there is good reason to believe that (after yet another false ending) the now nearly 40-year super cycle decline in bond yields may be at or close to over. But the end of the bond bull market is likely to be …
Central banks – including the RBA and Fed – gradually removing monetary stimulus is more good news than bad Key Points The march of central banks towards removing monetary stimulus is continuing with the RBA bringing forward its guidance regarding the first rate hike and the Fed set to commence tapering. We expect both to start raising rates later next year. The shift towards monetary tightening signals slower more constrained share market returns – but …
Market Update 29 October Investment markets & key developments Share markets were mixed over the past week – up in the US and Europe on strong US earnings results, but down in Japan, China and Australia. The Australian share market was hit by interest rate fears after a stronger than expected underlying inflation result and signs the RBA may be becoming more hawkish. Bond yields fell in the US and Europe but rose in Australia with …
Econosights: Should we be worried about an inflation breakout? Key points Current inflation concerns reflect a rise in consumer goods prices and a spike in energy costs. Most of the factors driving higher inflation reflect COVID related disruptions and should be temporary. But the inflation data is still likely to remain elevated over coming months. While a few central banks are starting to remove some monetary policy accommodation in response to inflation concerns, we don’t …
Rising bond yields and the end of the super cycle bull market in bonds Key Points It’s normal for bond yields to rise in economic recoveries but it’s looking increasingly likely that the nearly 40-year super cycle decline in bond yields is over. This will remove a key tailwind for investment returns over the decade ahead but as we have seen this year bond yields are unlikely to go up in a straight line. Introduction …
Market Update 22 October Investment markets & key developments US shares made it to a new high in the past week helped by strong earnings results and good economic data, and Chinese shares rose but European and Japanese shares pulled back slightly. The positive US lead also saw Australian shares rise helped by reopening optimism led by gains from property, IT, retail and financial shares. Bond yields resumed their upswing with 10-year bond yields in the …
Science and medicine appear to be getting the upper hand of coronavirus – implications for investors Key Points There are increasing signs that science and medicine are getting the upper hand against coronavirus: new global cases are in decline; vaccines are working; half the global population and 73% of Australians have had at least one vaccine dose; and there are more treatments for coronavirus. Key to watch will be whether hospitalisations in response to any …
Market Update 15 October Investment markets & key developments Global share markets mostly rose over the last week helped by a good start to the US earnings reporting season, solid economic data and US inflation data not being as bad as feared. The positive global lead also saw Australian shares rise led by materials, IT, health and property stocks. Bond yields pulled back a bit after their recent rise but oil, metal and iron prices rose …
The worry list for shares – how worrying are they? Key Points It’s still too early to say that the pull back in share markets is over. Some of the worries around US fiscal policy and politics, China, global supply constraints and central banks likely have further to run and could see the correction go further. Historically the main driver of whether we see a correction or a mild bear market, as opposed to a …
