Peace, or at least a way to navigate the Strait of Hormuz, seems a long way off. The price of Brent Crude is on the way up again, never a good sign for economies struggling to get inflation under control.
US inflation was announced overnight, coming in at 3.5% for the 12 months to the end of June 2026, down from 4.2% the previous month. It’s heading in the right direction but still too high.
In the graph below, the red line shows 12 monthly inflation and the blue line monthly inflation. This month’s drop is significant when comparing it to other months over the last decade. With only two other months showing similar declines and both contributing to large annual falls.
Pundits are predicting a wide range of outcomes for US interest rates over the next year with the next US Federal Reserve meeting due late July. According to Rate Probability, there’s a 12% chance of a hike at the next meeting and one to two hikes are expected over the next 12 months.
US 2 Year Treasuries have been moving higher since March, when they were around 3.4% to overnight’s 4.21%, down from 4.29% on Monday.
The next RBA decision is due 3-4 August 2026.
The Bloomberg Global Aggregate Bond Index provides a view of global markets, with more than 30,000 securities and a market cap of over US$70 trillion. The lead article from April La Russe at Insight Investment analyses changes in the index and how to exploit it.
Private credit continues to be a hot topic, and this week we publish a paper from Alan Greenstein of Zagga explaining the attractiveness of the Australian market to global investors.
John Vilbert from PGIM wrote an excellent article comparing private and public markets. He argues you need to be investing in and managing both as the two sub-sectors converge.
Finally, we have Betashares’ latest ETF report, showing investors favour passive over active and impressive double digit inflows for 1H26.
In Australian corporate bond market news:
- Nationwide raised $750m in a five-year senior preferred, dual tranche deal:
- $550m in a floating rate tranche priced at 130 basis points over semi quarterly swap
- $200m in a fixed rate tranche with a 5.528% issue yield
- United Energy Distribution raised $400m in a fixed rate five-year senior unsecured deal, with a 5.497% coupon or 95 basis points over semi quarterly swap
Have a great week.
