Hybrids – Yields set to fall The recent APRA paper proposing changes to a bank’s capital structure will reduce the requirement of banks to issue hybrids (Capital Notes or AT1 capital). Whilst there is much water to flow under the bridge on how this plays out, the current crop of listed hybrids will be well … Read more
The way the markets reacted to the US data releases last week was a little odd. Perhaps the Wall Street Junkies are all blinded by the impending Federal Reserve interest rate decision where they now expect a 50bps cut and if they don’t get it they will not be happy because it will be sobering? … Read more
It should not go un-noticed that there was quite a lot of volatility in the currency markets on Friday. We may be getting an early warning signal of another bout of Yen Carry Trade unwinding-risk off trading this week. The following exchange rate charts show that the Yen is reaching towards the same levels that … Read more
A few weeks ago, after the attempted Trump assassination, we began collecting our thoughts on the implications of a Trump Presidential win and/or the Republicans gaining control of the Senate (they already have Congress). Although there are few details yet, he has promised “lower taxes, bigger pay checks, and more jobs for American workers” by … Read more
It’s been an interesting month or so in global equity markets. However, if all you did was look at the price movements across key global equity markets in our daily morning report (see Fig 1), you would probably struggle to understand the “interesting” reference. All seems calm with prices up across the board. But these … Read more
There were 3 surprises last week: ISM manufacturing PMI moving above 50. The 308,000 increase in non-farm payrolls in March. The equity market’s reaction to the non-farm payrolls data. Firstly, the US ISM manufacturing PMI was not only much higher at 50.3, than the 48.3 expected for March, it was the first reading above 50 … Read more
The last 10 days have certainly been exciting enough, although as capital preservation-focused investment managers we prefer boring, reliable, predictable etc. The market may well have been upset with the RBA after it left rates on hold and issued the most hawkish statement we have seen from Governor Bullock to date, but it did not … Read more
Who bought the dip? We often hear how retail money often rushes in to buy the dip in scenarios we had earlier this week. Well this time it was different. When the markets crashed on Monday, it was the retail investors who sold whilst institutional investors gradually increased their buying as the carnage rolled on through … Read more
Last week we said that it would be a huge week for economic data and certainly it did not disappoint. Chronologically we had the Australian CPI data, BOJ interest rate decision, US ISM PMI manufacturing data, US labour productivity data and of course the US non-farm payrolls on Friday night. Australian CPI quarterly data We … Read more
The narrative around a “new commodities supercycle” has received a lot of airplay in recent years. Commodities have seen a material rally in prices from their 2020 lows, which only adds fuel to the narrative. It is a worthwhile exercise considering the opposing argument in this narrative – what is the market missing? There have … Read more