The US Fed kept rates on hold last week at 3.50-3.75%, but there were three dissenters, highlighting disagreement in the group. Even though rates were unchanged, US Fed Chair Warsh’s move to cut forward guidance unsettled markets. Forward guidance had a calming effect and provided confidence in the overall direction of interest rates. Going forward, I expect US rates to be more volatile, and very dependent on the latest data. Warsh also indicated an openness to other inflation tools besides rate hikes to curb inflation at the post-announcement conference, which will likely increase uncertainty.
US government bond yield curve has been rising. The latest is shown in the bold line, with one month ago shown in the pale green.
Regular contributor, Arif Husain from T. Rowe Price is bearish on US Treasuries and thinks the US yield curve need to move ‘materially higher’.
Interestingly, non-US bond markets appear to be increasingly attractive, with some global investors shifting towards other, more stable, government debt markets including Australia, citing concerns about persistent US inflation and uncertainty over the Fed’s policy path.
There’s been plenty of new investment opportunities hit the domestic market over the last week:
- Real Asset Management (RAM) launched a $100m reverse enquiry placement of its RAM Secured Income Notes Tranche 2 (ASX: RAMHA).
- Colchester Global Investors has launched its first ASX-listed ETFs.
- State Street Investment Management announced the upcoming launch of two actively managed ETFs.
I had the pleasure of interviewing Peter Kent from Ninety One, the South African-based global investment manager with US$244 billion in assets under management. Kent is a strong advocate for diversifying into emerging market debt, this note provides three reasons to consider adding it to your portfolio.
Emma Lawson from Janus Henderson is back with her very popular Australian Economic View.
And, in case you missed our latest podcast, we have it linked here again. A great chat with Adam Marden, co-portfolio manager for the Dynamic Global Bond Strategy at T. Rowe Price.
Hope you’re having a great week!
