The RBA’s Monetary Policy Board surprised the market, deciding to keep the cash rate on hold at 3.85%. The statement reported the Board judged ‘that it could wait for a little more information to confirm that inflation remains on track to reach 2.5 per cent on a sustainable basis’.
While I did expect the Board to cut yesterday, I didn’t think it was such a surprise. There are ongoing global uncertainties around the impact of US tariffs. The Board is right to be cautious and take it slow. Inflation is damaging, and we don’t want to see it rear its head again. What I did find interesting was the publication of the record of votes showing six in favour of a hold and three against. I would have thought it might be a closer call.
There’s lots of data due in the next month, including quarterly CPI, labour force, and retail trade, and there should be more clarity on US tariffs. An August cut could be on the cards, but it will likely depend on the data. PIMCO provides some additional insights into the decision.
I’m very pleased to announce we have updated the FINA Managed Fund Finder. It shows 130 funds from more than 35 issuers, taking the total number of funds on the Fixed Income News website to 215, and still growing. It’s fantastic to see the development of the asset class.
Pengana, in association with Mercer, has launched several global private credit vehicles. This article explains why it’s good to diversify your investment and consider global opportunities.
Slower growth and higher inflation? They’re the expectations of AXA IM’s Chris Iggo, who urges investors to think about locking in gains rather than chasing higher returns.
His views align with Tim Murray from T Rowe Price, who warns ‘as of June 24, the S&P 500 was priced at 21.6 times expected next‑12‑month earnings. This was near the highest level reached during the past 20 years. Murray thinks high-yield bonds could be an alternative.
Finally, Anders Persson from Nuveen provides a mid-year fixed income update.
Have a great week!
