News & Insights
Here you’ll find our thinking and helpful insights on the latest developments in domestic and global markets.
Investment and Economic Snapshot February 2023
In stark contrast to January’s positive start to the year, February proved to be a stern reminder that the current bear market may have further to run. Over the past few weeks, global bond yields have risen materially, amid concerns that better than expected economic data raises the risk that central banks will need to respond more forcefully with higher interest rates to keep elevated inflation at bay.
Investment and Economic Snapshot January 2023
The year kicked off in fine form, with all major market indices posting above-average returns this month. News that inflationary pressures were starting to wane in the US caught the attention of investors, triggering strong, speculative buying, with continued high hopes that central banks are nearing the end of their tightening cycles.
Investment and Economic Snapshot 2022 In Review
2022 was an extremely challenging and highly unusual year, with investors experiencing the longest bear market since the Global Financial Crisis. What made 2022 so unique was the fact that both global stocks and bonds fell by more than 10% after coming into the year with promising prospects.
Today, we view 2023 as a year when inflation will subside as monetary tightening runs it course and supply constraints ease from the pandemic. However, recent data suggests that it may still take a further 6-12 months before inflation is back to a level of 4%. The move from 4% to 2%, which many central banks are still targeting, will take longer as the labour market remains strong and shelter/rental inflation remains sticky.
Download our 2022 In Review to take a look back over the year that was in financial markets, and to read our outlook for 2023.
Investment and Economic Snapshot November 2022
The past couple of months have been much better than expected for equity and bond markets despite deteriorating demand conditions both domestically and globally. The ASX continued its golden run, posting +6.4% for the month and an impressive +3.0% for the year.
Investment and Economic Snaphot October 2022
Most global financial assets rebounded this month following a sustained period of mediocre performance over August and September.
Global sovereign bonds posted a small gain in October following a gradual decline in real yields as the month progressed.
The Reserve Bank of Australia surprised markets with a less-than-expected 25bp rate hike. Australia was also the first among developed
market economies to slow its pace of hikes despite elevated inflation.
Investment and Economic Snapshot September 2022
All major financial markets except for the US dollar went into rapid retreat last month. Global and US fixed-income markets posted poor returns as central banks continued to fight fire with fire with outsized interest rate hikes.
Meanwhile, global manufacturing activity continued to deteriorate adding to the weight of evidence that the global economy is struggling and running head-first into a recession.
Investment and Economic Snaphot August 2022
A brief rally kicked off the month as evidence of easing price pressures and deteriorating demand conditions led investors to speculate that the Federal Reserve will be forced to abandon its hawkish stance. However, all bets of a ‘Fed pivot’ were abruptly put to bed and the market was given a reality check following Federal Reserve Chair Powell’s speech at ‘Jackson Hole’ where he reiterated that the Fed remains doggedly determined to bring inflation under control, even at the price of the economy slowing significantly.
Investment and Economic Snapshot July 2022
The month of July saw financial markets roar back to life following a terrible June and end of the financial year. However, the outlook for global growth continues to be challenged. Much depends on whether inflation can be brought to heel and if not, to what extent central bankers will go to bring it under control without breaking the economy in the process.
Investment and Economic Snapshot - FY2021/2022 in Review
FY2021/2022 was an extraordinary 12 months from both an economic and financial market perspective. While the six month period ending the calendar year 2021 showed positive signs, the second half of the financial year 2021/22 was arguably one of the worst periods we have experienced in many years for investors.
Investment and Economic Snapshot May 2022
The performance of global financial markets showed some improvement in May, with global equities, US equities, and emerging markets all generating small positive returns.
Investment and Economic Snapshot April 2022
Australia’s headline inflation rate surged from 3.5% to a 10-year high of 5.1%. In the face of overwhelming evidence that inflation is not only accelerating but wage growth is also finally picking up pace, the Reserve Bank belatedly increased the cash rate by 25 basis points to 35 basis points, the first increase in more than a decade.
Investment and Economic Snapshot March 2022
As the war in Ukraine continues to unfold, the conflict is having a marked effect on the outlook for global economic growth, energy supply (especially in Europe), energy prices and of course, inflation. This has created an incredibly challenging environment for central banks to manage.
Investment and Economic Snapshot February 2022
Russia’s deplorable invasion of the Ukraine in late February stole the headlines this month, fuelling a widespread pull back in global share markets. The fog of war contributed to an overriding sense of unease and uncertainty, exacerbating an already volatile macroeconomic backdrop still trying to come to grips with high inflation and the prospect that central banks will accelerate quantitative tightening.
Investment and Economic Snapshot January 2022
It was a poor start to the year for financial markets, with all major financial assets posting negative returns in January. Cash and commodities were the only asset classes to be spared as markets developed a nosebleed after reaching dizzy heights in 2021.
Investment and Economic Snapshot – 2021 Year in Review
The global economy continued to recover throughout 2021 courtesy of an ultra-low interest rate environment and a slow but steady vaccination roll out.
There are several known risks on the horizon, including a persistent pandemic and the prospect of higher for longer inflation, but we are cautiously optimistic about the prospects for the year ahead. Monetary policy is still highly accommodative, savings rates are high, corporate balance sheets are strong, and confidence is returning. Lower returns and higher volatility however will be features of the year ahead.
Investment and Economic Snapshot November 2021
Financial markets contracted in the final days of the month after the discovery of the new COVID-19 variant Omicron, reached Australian shores. The volatility index shot higher as market fears took hold, resulting in intense selling pressure of risk assets in the final days of the month both in Australia and overseas.
Investment and Economic Snapshot October 2021
Throughout the month, further evidence surfaced suggesting that Australia’s economic recovery is on track and is quickly gaining momentum. Investor and consumer confidence continued to rise, buoyed by promising vaccine statistics, and a gradual easing of lockdown restrictions.
Investment and Economic Snapshot September 2021
The big news for markets in September was the announcement by the Fed that their tapering program would begin around the end of the year. This pushed real yields higher by around 20bps and sent the US 10-year government bond yield towards 1.50%. Here in Australia, the Reserve Bank of Australia was a little more dovish due to the continued impact from lockdowns, stating they would delay the review of the current bond purchase program until their February 1 2022 meeting. As a result, our 10-year bond yields rose, but at a slower pace than the US, finishing the month up 14bps.
Economic Snapshot August 2021
August saw more of the same themes and risks that global financial markets had focused on in July. COVID-19 continued to spread around the world, leading to further slowing of economic activity, disruptions to global supply chains, and pockets of inflationary pressures.
Economic Snapshot July 2021
July saw markets continue to worry about the global growth profile. Some key readings of economic activity in June were lower than in previous months, leading markets to revisit the “peak growth theme”. Potential disruption from the accelerating COVID-19 waves around the world added to these concerns. This narrative outweighed some stronger than expected inflation figures.