Arculus Funds Management

The US bond market was awoken from its delirium last week by the surge in the core PPI data. The index showed a 0.9% increase in July made of: Services 1.1%. Goods 0.7%. This lifted the 12-month PPI to an increase of3.3% from its June 2.4% reading. The message was that, in aggregate, companies are … Read more

Although the headlines will be all about the US jobs data it was probably a combination of factors that triggered the big fall in US yields on Friday night. In no particular order here is the Friday night list: Non-farm payrolls plus 74,000 jobs added in July. June payrolls were revised down from 147,000 to … Read more

The only real or hard bit of economic data last week was the US durable goods data. For economists, who understand economic theory, the durable goods data is a key forward indicator because the ex-defence durable goods data is a good proxy for business spending plans (Capex). Last month ex-defence durable goods declined 0.7% when … Read more

The 90-day BBSW rate surged 19bps to 3.76% after the RBA decision to leave rates on hold at the July meeting and finished the week at 3.72%. Some market participants are still wanting to believe that a rate cut will occur in August, but we strongly believe that expiry of the large electricity subsidies (State … Read more

US Economic Outlook Last week’s non-farm payrolls number of 147,000 was far in excess of the market’s expectations of 110,000. Ordinarily we would not see this as significant for the bond market because a 125,000 monthly increase is required to keep the unemployment rate steady and so a reading in one month of either 147,000 … Read more

The US strikes on Iran’s nuclear facilities on Sunday will no doubt impact markets on Monday, but it could have been worse. The US has targeted only the 3 main uranium enrichment facilities and perhaps forestalled Israel targeting Iran’s oil production and shipping infrastructure. Macro Commentary One of the less obvious byproducts of the Israel … Read more

Last week’s US CPI was largely ignored by the markets – just as well. The data is currently distorted by the inventory tariff related build up and the ongoing tariff uncertainty. It is our view that, fundamentally, US markets and by association all global asset markets are rapidly approaching a day of reckoning. None of … Read more

There has been a lot of commentary from all sources about the correlation between the USD, equity and bond markets in April. Several Fed Governors, market strategists and large investors have all given their opinions on why this occurred. They are all desperately trying to make something simple complex. The USD, Equity Markets and Bond … Read more

It is worth remembering, that economic forecasts from the RBA and the major banks that inflation will keep falling, are from the same economists that did not predict that inflation would rise in 2022. Arculus was then one of the few lone voices in the forest pointing out from late 2020 that all the ingredients … Read more