Why are bond yields so low?

Published: February 13, 2015

Key Points Bond yields at/around record lows reflect a combination of low inflation, low growth, low interest rates, safe haven demand and falling bond supply. Long term they won’t be sustainable at these levels, but given the historic experience after past periods of falling yields they could linger for a while. Super low bond yields […]

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Australian interest rates still on the slide

Published: February 4, 2015

Key Points The RBA was right to cut interest rates again. Growth is too low and inflation is benign. Expect the cash rate to fall to 2% in the months ahead. Record low borrowing rates, the lower $A and the boost to spending power from lower fuel prices should help boost growth to 3% or […]

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Greece and the ECB – is the Eurozone crisis about to make a comeback?

Published: January 28, 2015

Key Points While Syriza has won the Greek election, a Grexit is not the most likely outcome. Even if Greece were to exit the Euro, peripheral Europe is now in far better shape than in 2010-12 and Eurozone defence mechanisms are stronger. While the Euro likely has more downside, Eurozone shares are attractive reflecting relatively […]

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The threat of global deflation

Published: January 21, 2015

Key Points Falling inflation on the back of falling commodity prices and global spare capacity indicates deflation is more of a threat globally than a surge in inflation. Further monetary easing in Europe, Japan and elsewhere should help head the threat off but it’s worth keeping an eye on. Low interest rates will remain, with […]

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2015 – a list of lists regarding the macro investment outlook

Published: January 16, 2015

 Key points: 2015 should be another reasonable year for investors reflecting okay growth and easy monetary conditions, but expect a bit more volatility.  Watch global business conditions indicators, US wages, Spanish and Italian bond yields, the ECB, the Chinese property market and confidence readings in Australia. The investment cycle still favours growth assets over cash […]

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The plunging oil price – why and what it means

Published: January 9, 2015

 Key points: Oil prices have fallen more than 50% over the last year driven largely by a surge in supply relative to demand. Further weakness to around $US40/barrel is likely to be necessary to bring forth supply restraint. While lower oil prices are negative for energy producers and this has been weighing on share markets, […]

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Review of 2014, outlook for 2015

Published: December 5, 2014

Key points: 2014 has been a positive but somewhat constrained and messy year for investors as the global economy remained in a cyclical “sweet spot” despite various threats, but Australian shares underperformed. 2015 is likely to see okay but uneven global growth, low inflation and easy monetary conditions. While the US is likely to start […]

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China cuts interest rates

Published: December 2, 2014

Key points:  For the first time since 2012 China has cut interest rates. Borrowing costs have been too high in China so rate cuts will help support economic growth. Expect more interest rate cuts ahead. The rate cut is positive for Chinese shares which remain relatively cheap. China’s rate cut highlights that global monetary conditions […]

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Starting point valuations matter, a lot

Published: November 19, 2014

Key points:  Starting point valuations – eg yields and price to earnings multiples – are a key driver of potential medium term investment returns. This is particularly so for cash and bonds, and for shares and growth assets at extremes.  At present valuation starting points for term deposits and bonds suggest low medium term returns. […]

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The end is nigh, or is it? Try to turn down the noise

Published: November 13, 2014

Key points:  A combination of the blanket news coverage of economic worries, the associated information avalanche we are now exposed to and our innate fascination with crises is likely making us worse investors: more fearful, more jittery and more focussed on the short term.  Investors should recognise that shares climb a wall of worry, try […]

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