Market Commentary.

4 Apr, 2022

Because I Was Inverted

By |2022-04-04T12:58:48+10:00Apr 4, 2022|Market Commentary|

Many in markets are aware the US Treasury yield curve is inverting. This means yields at the short-end are higher than the long-end. Historically this has been bad for banks (they borrow short and lend long) and economic sentiment more generally. Further discussion is tacked onto the inversion, with regard to correlation and causation. In other words, just because there [...]

1 Apr, 2022

Difference in Investor Markets on Stark Display in Bank Capital

By |2022-04-04T12:55:55+10:00Apr 1, 2022|Market Commentary|

Suncorp issued a new Tier 2 capital instrument earlier this week with the wholesale 10 year, non-call 5 year security issued at a margin of 2.30%.  Issued into the wholesale market with Austraclear settlement, the bond is generally bought and traded by Institutional investors or investors that qualify as wholesale sophisticated investors.  These investors typically mark their portfolios to market [...]

16 Mar, 2022

Rising US Inflation Will Impact Australians

By |2022-04-04T12:52:29+10:00Mar 16, 2022|Market Commentary|

US inflation hit a 40 year high in February 2022 at 7.9% - up from 7.5% as reported by the US Labor department a month earlier.  Bloomberg reported that the primary reasons for this outcome   lay not just in the rising cost of petrol, but also food and housing costs.  Looking even closer at the inputs that go into the [...]

10 Feb, 2022

Powell Giveth, Powell Taketh

By |2022-02-11T13:47:28+11:00Feb 10, 2022|Market Commentary|

In 2022 we expect volatility to increase as a function of central bank liquidity draining from the system. In parallel, we expect inflation to remain persistent, as we have argued since May 2020. This makes asset allocation difficult as the prospects for real return in many sub-asset classes are slim. We noted the possibility of a mini-cycle in July 2021 [...]

3 Feb, 2022

2021 Research Review

By |2022-02-03T15:00:04+11:00Feb 3, 2022|Market Commentary|

Click here for a print friendly version. Walk the Talk BondAdviser’s desk, occasionally in WFH format, was active across a tumultuous 2021, providing over 360 recommendations, across 145 unique securities and 55 different issuers. More importantly, the vast majority (62%, [n=84]) of our conviction recommendations (defined as Buy, Sell, or Subscribe) added alpha against that of the respective security benchmark. [...]

10 Nov, 2021

The Ice Gets Thinner

By |2022-02-03T15:01:40+11:00Nov 10, 2021|Market Commentary|

Despite market sentiment, we believe there are growing risks to credit spreads of financials. This is technical in nature rather than fundamental. After successfully trading beta on subordinated financial bonds and hybrids, the repricing of senior spreads following the roll-off of the Term Funding Facility means we now look to underweight the largest component of the AusBond Credit Index. Non-financial [...]

8 Jul, 2021

Bird of Prey Nowhere to be Seen

By |2021-09-27T06:41:24+10:00Jul 8, 2021|Market Commentary|

Fixed Income Research Investment Strategy Bird of Prey Nowhere to be Seen With spreads largely at all-time lows and sourcing real yield proving problematic, asset allocation is challenging for those with constrained mandates. Flexibility in this environment is key; we are still finding ample value in the market, but much of this is capital, not carry based. Although the RBA [...]

9 May, 2021

At the Breakdown: Fixed Income State of Play

By |2021-09-24T16:19:37+10:00May 9, 2021|Market Commentary|

Fixed Income Research Investment Strategy At the Breakdown: Fixed Income State of Play We have deep dived into fixed income markets, searching for value before the ruck forms. Despite an awfully weak inflation print, we have little faith in the long end, believing more is needed to understand if pricing pressure is indeed transitory. Ultimately, we believe the RBA will [...]

10 Mar, 2021

Ark of the Covenant

By |2021-09-24T16:20:25+10:00Mar 10, 2021|Market Commentary|

Fixed Income Research Investment Strategy Ark of the Covenant   Jock! Start the Engine! The longer the rout in global bond markets continues, the more difficult it will become for central banks to control. We continue to believe the US and domestic economy will firmly rebound and that the tide has turned for duration. The current predicament for central banks [...]

17 Jul, 2020

We’ve Been LIT Up

By |2021-09-24T16:20:41+10:00Jul 17, 2020|Market Commentary|

Fixed Income Research We’ve Been LIT Up But Will We Return to NAV?   That is a hard question to answer, but there is still a lot of meat on the bone here – both in terms of capital upside but also cash yield. Overall, debt focused Listed Investment Trusts (LITs) have performed well from March lows. Cash distributions have [...]