In this episode (2:47 minutes), JCB’s Chief Investment Officer Charlie Jamieson and Senior Portfolio Manager Vijay Murik discuss recent global central bank moves and what they mean for markets and the Australian economy.
Key themes include:
- Global rate moves: Cuts from the US Federal Reserve and Bank of Canada, with more easing expected from the Bank of England and Reserve Bank of New Zealand. The Bank of Japan held, but may hike next.
- Australia: Despite a stronger August monthly CPI inflation reading, the RBA held rates steady this week. The cash rate is still likely to move lower, though the timing may be more drawn out.
- Markets: Front-end repricing (shorter-term interest rates or bonds, the “front end” of the yield curve) has occurred, but longer-dated bonds (bonds with longer maturities, the “long end” of the yield curve) remain steady.
- Currency impacts: If the US Fed accelerates its cuts while the RBA moves more slowly, this could place further upward pressure on the Australian dollar.
- Outlook: Inflation is expected to step down later in the year, keeping the path toward lower rates intact, even if the journey is slower.
The takeaway?
The global rate cut cycle is progressing. Despite recent Australian data, inflation is expected to ease, keeping the direction of travel for the RBA clear.
This information is for professional and wholesale investors only and has been prepared by JamiesonCooteBonds Pty Ltd ACN 165 890 282 AFSL 459018 (‘JCB’). Channel Investment Management Limited ACN 163 234 240 AFSL 439007 (‘CIML’) is the Responsible Entity and issuer of units for the CC JCB Active Bond Fund ARSN 610 435 302, CC JCB Global Bond Fund ARSN 631 235 553 and the CC JCB Dynamic Alpha Fund ARSN 637 628 918 (collectively ‘the Funds’). Channel Capital Pty Ltd ACN 162 591 568 AR No. 001274413 (‘Channel’) provides investment infrastructure and distribution services for JCB and is the holding company of CIML.
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