Australian markets were influenced in July by a slight softening in inflation data that saw bond markets go from pricing in a potential rate hike at the next RBA meeting (5th - 6th August) to a potential rate cut by February. This lifted Australian equites to new highs and also saw bond yields fall (prices increase).

In June US inflation for the year to May was released with the annual rate of inflation falling to 3.3% (down from 3.4% the previous month) which is still much higher than the US Federal Reserve’s targeted 2% inflation rate. US bond yields responded favourably to the improved inflation data over the month.

In May US inflation for the year to April was released with the annual rate of inflation falling to 3.4% (down from 3.5% the previous month) which is still much higher than the US Federal Reserve’s targeted 2% inflation rate. Despite the higher inflation print bond yields, or to put it another way, the expected future cash rates fell assisting US equity valuations.

In April equity markets reflected a change to valuations as the likelihood of cash rate cuts in 2024 lessened and investors began to factor in a “higher for longer” interest rate backdrop. Broadly speaking international and Australian equity markets were weaker by around 3% and Australian Real Estate Investment Trusts (AREITs) after rising by 10% in March sold off by 8% in April, reflecting the higher for longer bond rate thematic.

In March equities moved higher and many markets continued making new all-time highs as bond yields fell slightly driven by the further expectation that central bank rate cuts are due to occur in 2024. However, the Bank of England, the European Central Bank and the US Federal Reserve are yet to cut rates after their recent tightening cycles.

When you picture your retirement, are you anxiously tracking your expenses or are you engaging in all the activities that you wanted to, confident that your money won’t run out? Ideally, it’s the latter — but there’s no guarantee things will pan out that way.

If you were asked to list your most valuable assets, your home, vehicle and investment portfolio would probably top the list. But it’s easy to overlook the thing that allowed you to accrue all these in the first place: your ability to earn an income.

Australians trying to break into the property market today face their fair share of challenges. Property prices have risen at a much quicker pace than incomes, and the high cost of living can make saving a deposit seem next to impossible.

In February as per in January the US and Australian equity markets continued to move higher and achieve further new all-time highs. During the month US inflation fell to 3.1% annually from 3.4% driven by a decline in petrol prices. Offsetting lower petrol prices were higher housing and food costs. It’s worth noting that Core Inflation (which excludes volatile items such as food and energy) was flat at 3.9% annually. Australian inflation was reported late in February and came in at 3.4% annually, the same level as the prior month. The conclusion from these data prints is that whilst inflation is to a degree contained, there’s still a way to go before inflation is back between 2-3%. Longer dated bond yields rose in the month reflecting this dynamic.