The RBA’s Monetary Policy Board cut the cash rate to 3.85% yesterday, as expected. There are plenty of commentators calling for further, quick cuts to take the terminal rate to a ‘2’ handle. I think there’s more of a chance for lower rates than I did at the back end of last year. However, the Board will likely err on the side of caution. Employment is strong, so is the housing market and further, multiple cuts may add fuel to an already hot market. A global investment analyst I spoke to recently, thinks Australia’s economy is on more solid ground than the US, so thinks our rate-cutting cycle will be shallow.
Predicting where rates will settle is difficult. Adam Bowe from Pimco, said rising global trade barriers pose downside risks to regional growth and expects the Board will gradually cut rates this year.
Do you ever wonder where institutions are investing? bFinance research shows more are searching for private market investments. This is a very insightful article and well worth a read.
US Inflation is down and the probability of rate cuts has declined since the end of April, according to John Kerschner of Janus Henderson. However, he still sees value in the overall yields available.
Moody’s has finally aligned its credit rating with other major rating agencies, S&P Global and Fitch, and downgraded the US government rating a notch to Aa1 from the highest AAA rating. This is long overdue and had little impact on markets.
Have a great week!
