Australia’s September CPI was released this morning and rose to 4.3% up from 4% in the 12 months to August 2026. Trimmed mean inflation was 3.6% up from a revised 3.5% in the same period. The trimmed mean is the more important figure and has been steady for some time, which I think means we should see another cash rate hike on Melbourne Cup Day, Tuesday the 3rd of November.
Markets are showing circa 90% probability for a hold for the US Fed when it next meets. Benoit Anne from MFS Investment Management says:
“Our investment team expects the Fed funds rate to be kept unchanged at this week’s Fed policy meeting. We are of the view that the Fed wants to be measured, with the possibility of a hike at every other meeting in the period ahead. In other words, a rate hike in December remains possible. For now, what we have recently heard from various Fed speakers is no sense of urgency.”
US investment-grade bond issuance has reached a record US$1.76 trillion this year, beating 2020 highs. AI-related raises contributed $300 billion, close to triple the amount raised last year, with even more expected in 2027.
There is a proposal for changes to the domestic covered bond market, which allows banks to raise cheap funding in exchange for very high quality security. If approved, they could allow an extra $65 billion in additional issuance according to Fitch Ratings.
It was interesting to read of NextDC’s $2 billion data centre fast-track approval by the Victorian government this morning after we published an excellent paper by T. Rowe Price which sets out a framework to evaluate data centre deals earlier this week. The company sets out four pillars for evaluating deals, one of them being electricity and grid. How is the centre powered, and does it add to or mitigate grid stress? The framework is well worth a read.
Two new massive capital raises by the Anthropic IPO and Meta has been the centre of attention according to Philip Brown from FIIG Securities.
Dianna Carr Coletta from PGIM provides a reality check on private credit, stating it’s a relationship business and that strong covenants will bring the borrower and lender to the table before liquidity is exhausted.
We publish a 2027 outlook for private markets from FinCap that includes sectors where they see value.
Mark Dowding from RBC BlueRay Asset Management wonders if the sell-off in French government bonds has gone too far, with the spreads of the 10-year to the German Bunds exceeding 175 basis points for the first time since 2011.
In Australian corporate bond news:
- Bank Australia raised $300m in a senior unsecured floating rate note which priced at 117 basis points over 3-month BBSW
- BOQ has priced a three-year, $800m senior unsecured floating rate note at 92 basis points over 3-month BBSW
- Challenger has launched five-year senior secured annuity-backed notes with price guidance of 140 basis points over swap.
Hope you’re having a great week!
