Market Update - November 2023
21 November 2023
Your Market Update - November Summary
Chart of the Month
This month we look at why being invested (and remaining invested) in the market is the key to long term investment success.
The temptation to “time” the market and deviate from your strategic asset allocation during volatile markets is strong. The opportunity cost, however, can be great.
The chart shows the impact that missing the best trading days of the Australian equities market (S&P/ASX300 Accumulation Index) can have on investment returns.
If you were invested in the market for the full period (June 2008 to June 2023) the annualized return would have been 6.73%. However, if you mistimed the market, and missed out on the best 50 trading days over the same period, the annualized return would have been -5.34%.
By being out of the market, you risk missing out on market rallies which tend to follow market downturns.
Market Developments during September 2023
Australian Equities
October saw the ASX 200 finish down 3.8%, marking the third consecutive month of negative returns. 10 of the 11 sectors finished in the red, with Utilities finishing October as the only gainer (1.7%). Several factors have contributed to the drag on returns, including stubborn inflation, rising bond yields, tentative company earnings outlooks and ongoing geo-political tension.
Expectations for a November RBA rate rise were high following accelerating retail spending data and a stickier-than-expected inflation report. This sentiment of rising interest rates was echoed in the yield-sensitive Real Estate sector as it saw a significant downturn.
In all, the ASX 200 retreated in October, indicative of the significant headwinds that the local market continues to face.
Global Equities
Global equities had another negative month across the board. Investor concerns continue around interest rates remaining higher for longer. US equities declined following the Federal Reserve’s stance of a “restrictive” policy until inflation seems to ease. This saw the S&P500 Index decline by -2.1% (in local currency terms) during the month. The same concerns were raised in the UK, also holding interest rates at 15-year historical highs. The FTSE 100 Index returned a loss of -3.7% (in local currency terms) for the month.
Equities across Asia were also predominantly negative. China’s economic growth recovery plans have seen relative slowdown, with headwinds in the real estate sector and investor pessimism around the levels of Government involvement. This was reflected by the CSI 300 Index, returning -3.1% (in local currency terms) for the month.
Fixed Interest
Michele Bullock kept the cash rate at 4.10% in her first meeting as Governor of the RBA. The Australian economy has remained strong and has meant inflation has been slower to fall. The market expected, and received, another rate hike at the RBA’s November Cup Day meeting with the official cash rate moving up by 25 bps to 4.35%.
Yields in the US continued to rise this month with US 10-Year Treasury note yields rising 36bps and 2-Year Treasury note yields rising 5bps. Strong economic data has kept central banks hawkish, and a peak this month in yields represented the highest yields for US 10-Year Treasury since 2007. However, the strong job market has maintained higher consumer spending levels and future rate hikes may lead to further rate hikes from the Fed.
REIT’s (listed property securities)
Local and Global REITs continued to sell off during October. Domestically the A-REIT index (represented by the S&P/ASX 200 A-REIT Accumulation Index) ended the month –5.8% lower. Global REITS (represented by the FTSE EPRA/NAREIT Developed Ex Australia Index (AUD Hedged)) slightly outperformed the local REIT index, albeit still experiencing a significant drawdown of –4.4% during the month. Australian infrastructure finished lower through October, with the S&P/ASX Infrastructure Index TR returning –3.1% for the month.
The Australian residential property market experienced a +0.9% change month on month represented by Core Logic’s five capital city aggregate. Perth (+1.6%), Brisbane (+1.4%) and Adelaide (+1.3%) were the best performers. Notably, all five cities experienced positive change month on month through October.
Market updated - October 2023
24 October 2023
Your Market Update - October Summary
Main Market Themes
• Longer term global bond yields, and particularly US 10 year Treasuries, have moved to near a 16 year high. This has been attributed to the US Federal Reserve committing to a “higher for longer” interest rate regime, even though inflation appears to be slowing. This has unsettled markets and has been exacerbated by a strengthening US$ and higher oil prices.
• Australia looks to be in better shape and there is a lower need to issue Australian bonds as we have a budget surplus, low unemployment and higher tax inflows from increasing iron ore and gas royalties. Consequently, there is less impetus for further interest rate increases locally.
• China has been experiencing mixed growth with some stimulus measures being deployed. Consumer spending and confidence is yet to recover, particularly while there continues to be concerns around the Chinese property sector with some developers missing interest payments.
Chart of the Month – Missing the 10 Best Trading Days can hurt!
When markets are volatile or the direction uncertain, investors can be tempted to sit out of the market.
The chart below shows the growth of $10,000 invested in June 2008 and the impact of missing the best trading days of the Australian equities market (S&P/ASX300 Accumulation Index) can have on investment returns.
By being out of the market, investors risk missing out on market rallies which tend to follow market downturns.
Market Developments during September 2023
Australian Equities
The ASX 200 finished September down 2.8%, reflecting the losses seen globally. However, Australian equities did manage to outperform some global markets.
Energy was the lone bright spot in the market, returning 1.6%, riding the tailwinds of rising global oil prices.
In terms of the laggards, the Real Estate sector was hit hard with an 8.6% drop, reflecting the “higher-for-longer” rhetoric regarding interest rates, and the potential impact on property values.
Given the potential impact of interest rates on high-growth tech stocks, IT was another sector seemingly hampered by the hawkish sentiment in September, suffering losses of 7.9%. This mirrored the sell-off in US tech giants such as Apple, Nvidia, and Amazon.
Global Equities
Global equities had a negative month, with September typically being the worst performing month historically for stocks. Emerging markets outperformed developed market counterparts returning -2.3% (MSCI Emerging Markets Index (AUD)) versus a -4.0% return according to the MSCI World Ex-Australia Index (AUD).
Continued negative economic data in September saw another rise in bond yields and a decrease in equity markets, with inflation falling more slowly than expected, primarily due to rising energy costs. US equities stumbled amid an interest rate hold and the prolonged possibility of a government shutdown, recording one of its worst months for the year with the S&P500 Index declining -4.8% (in local currency terms) during the month.
The UK was one of the few positive performers for the month, with the FTSE 100 Index returning a gain of 2.4% (in local currency terms). This was driven by a decrease in domestic core inflation and surprising GDP data above expectations. The Bank of England also kept interest rates on hold.
Fixed Interest
In his final meeting as RBA Governor, Phillip Lowe kept the cash rate on hold at 4.10% for the third month running. This month’s meeting signifies Lowe’s final monetary policy decision hand down, with his seven-year term not being renewed. During his term, Lowe and the RBA board cut rates to an historic 0.1 percent, and subsequently hiked rates 12 times in a bid to control inflation. Lowe’s successor, Michele Bullock, took over the role on September 17.
The month saw a sharp repricing of bond markets with yields rising to cycle highs. Australian 2- and 10- Year Bond yields rose 25bps and 46bps respectively, and the Bloomberg AusBond Composite 0+ Yr Index returned -1.53%. Despite inflation rates falling and economic data showing a slowing economy, bond markets appear to be repricing due to concerns central banks are expected to maintain higher interest rates for a prolonged period.
The story was similar in the US, with the Federal Reserve holding the target cash rate steady at 5.25%-5.50% citing easing inflation pressures and concerns of slowing economic growth. Despite rate hike respite, bond markets experienced a poor month, correlating positively with equity markets. US 2- and 10- Year Treasury yields rose 18bps and 46bps respectively, and the Bloomberg Barclays Global Aggregate Index (AUD) returned -2.58% over the course of the month.
REIT’s (listed property securities)
The S&P/ASX 200 A-REIT Accumulation index finished September lower after consecutive positive months in July and August, with the index finishing the month -8.6%. Global real estate equities (represented by the FTSE EPRA/NAREIT Developed Ex Australia Index (AUD Hedged)) also fell, returning –5.3% for the month. Australian infrastructure finished lower through September, with the S&P/ASX Infrastructure Index TR returning -1.6% for the month.
The Australian residential property market experienced an increase by +0.9% Month on Month (as represented by CoreLogic’s five capital city aggregate). Adelaide was the biggest riser (+1.7%), followed by Brisbane and Perth (both +1.3%). All five capital cities performed positively for the fifth consecutive month with Melbourne (+0.4%) being the worst performing city. Over the one-year period, Perth was the largest gainer (+8.8%).
The Boyce Insider October 2023
11 October 2023
11 October 2023
The Boyce Insider - October 2023
Carmen Caldwell
Managing Director
Welcome to the first edition of The Boyce Insider newsletter. The Boyce Insider is designed to keep you informed about the latest developments, industry trends, and valuable insights that can benefit you and your business. At Boyce, we believe in sharing knowledge and collaborating closely with our clients to achieve mutual success.
As we celebrate our 50th anniversary, it gives me the opportunity to reflect on who we are as a firm and how we impact our clients and communities. Our success over the past 50 years is a testament to the dedication and expertise of our team, as well as the trust and support of our valued clients. We are grateful for the partnerships we have formed with generations of Boyce clients and team members. We have been thankful for the opportunities to make a positive impact on the financial well-being of our clients and our communities.
I hope you enjoy the first edition of The Boyce Insider, and we look forward to celebrating with you during our 50th year!
Employee Health and Wellness for a Thriving Workplace
Amanda Farrar
Head of People and Culture
In today’s fast-paced and competitive work environment, whether that be in a vibrant community in regional NSW or in a bustling city, the emphasis on workplace health and wellness has gained significant momentum.
As businesses recognise the value of a healthy and contented workforce, they are adopting innovative strategies to prioritise the wellbeing of their employees, ensuring both personal and company growth.
In regional Australian workplaces, the concept of health and wellness encompasses various initiatives designed to cater to the unique needs of employees in these environments. From promoting outdoor activities amidst nature’s bounty to fostering close-knit communities that encourage work-life balance, these initiatives take inspiration from the surroundings and lifestyles that regional Australia offers.
Some of the initiatives employers look to in support of their employees’ health and wellness incorporate providing access to fitness facilities and healthy snacks to offering stress management and mental health workshops and resources.
Incorporating health and wellness practices in all workplaces has proven to have a profound impact on the workforce. Employees experience higher job satisfaction and a stronger sense of belonging when their well-being is prioritised. The heightened motivation leads to increased productivity, bolstering the overall performance of businesses and contributing to economic prosperity.
Fostering a culture of health can enhance an organisation's reputation, making it more attractive to potential hires. In a competitive job market, potential employees seek out companies that prioritise well-being. Implementing effective health and wellness initiatives requires a thoughtful approach that considers the unique needs of the workforce. Companies can start by conducting surveys and engaging in conversations to understand their preferences and challenges. Collaboration with health and wellness experts can also assist in this space.
If you are interested in supporting the health and wellness of your team or you and your family, there are great resources available at on the NSW Government website Get Healthy. It is a free program to help individuals reach their wellbeing goals.
Cyber Security
Sean Richards
Head of Infrastructure
Cyber Security is an ever increasing threat that everyone needs to take seriously to ensure they don’t become a victim of cybercrime. The Australian government has taken a strong initiative in publishing information to protect Australians under the guise of the Australian Cyber Security Centre (ACSC).
The Australian Cyber Security Centre leads the Australian Government’s efforts to improve cyber security. As part of their role in strengthening Australia’s cyber security posture they provide significant and relevant information on their website, www.cyber.gov.au. Along with reports and findings there is a lot of practical content around increasing cyber security for both personal and business entities.
The ACSC publishes a yearly report titled the ACSC Annual Cyber Threat Report with the most recent report covering July 2021 to June 2022. Some of the key findings are:
An increase in financial losses to over $98 million with an average loss of $64,000 per incident.
Over 76,000 cybercrime incidents (an increase of 13 per cent from the previous financial year).
A cybercrime incident is reported every 7 minutes on average compared to every 8 minutes last financial year.
There are over 25,000 calls to the Cyber Security Hotline per year, this is an average of 69 per day and an increase of 15 per cent from the previous financial year.
150,000 to 200,000 Small Office/Home Office routers in Australian homes and small businesses are vulnerable to compromise. This includes state actors.
A 25 per cent increase in the number of publicly reported software vulnerabilities (Common Vulnerabilities and Exposures – CVEs) worldwide.
Fraud, online shopping and online banking are the top reported cybercrime types, accounting for 54 per cent of all reports.
A rise in the average cost per cybercrime incident to over $39,000 for small business, $88,000 for medium business, and over $62,000 for large business. This is an average increase of 14 per cent.
Businesses should visit Resources for business and government | Cyber.gov.au to look for some essential information relating to how to protect yourself from cyber crime.? Individuals can browse to Protect yourself | Cyber.gov.au for easy to read advice about how to protect yourself.
Remember to always stay aware and check your accounts and details regularly.
Navigating Australia's Financial Landscape
Lindsay Garnock
Executive Business Unit Leader - Boyce Wealth Management
5 Strategies to Thrive in Evolving Market Conditions of 2023-2024
As the financial landscape in Australia continues to evolve in the 2023-24 fiscal year, it becomes crucial for individuals to adopt and implement effective strategies to secure a stable financial future. In this article, we explore 5 powerful financial strategies tailored to the Australian market conditions that will empower individuals to navigate these changes with confidence.
- Create a budget:
Develop a comprehensive budget that outlines your income, expenses, and savings goals. This will help you track your finances and identify areas where you can save money. - Manage your debt:
Interest rates have been increased 13 times in the last 12 months and if you fixed at a lower rate, you may be in for a rude shock when the current rate term expires. Get in front of this and talk to your bank or broker to ensure you are prepared. It may be worth exploring if refinancing at a lower rate is possible. - Superannuation contributions:
Superannuation is a long-term investment, and the contributions you make now can have a significant impact on your retirement savings. By maximizing your superannuation contributions, you can take advantage of compounding returns and potentially grow your retirement nest egg. - Review your insurance coverage:
Assess your insurance policies, such as health, personal risk, home, and car insurance. Ensure you have adequate coverage and compare policies to find the best value for your needs.
Seek advice from relevant professional:
Consult with a tax professional to optimise your tax strategy.
Consider seeking advice from a financial advisor to optimise your investments for the current economic climate.
Consult with an estate planning professional to ensure your assets are protected and distributed as intended.
Economic update from your wealth management team
Positioning for an economic slowdown
Economic growth is slowing – Gross Domestic Product (GDP) fell to 2.3% in the June quarter and discretionary spending has reduced as cost-of-living pressures finally hit the consumer.
Corporate earnings have also eased but have not plummeted, which has pleased equity markets. However, earnings growth looks harder to come by in 2024. Rising interest rates, tighter credit conditions and higher costs are indeed feeding through the economy – albeit with a long lag.
Our base case remains that Australia will avoid recession thanks to a significant rebound in migration this year and the continued demand for our resources as the global economy continues its decarbonisation path.
Inflation has continued to soften slowly, with the latest headline number coming in at 4.9%. It’s still a long way away from the central bank’s target range of 2-3%. The RBA has kept rates on hold for a second month in a row but remains on alert as inflation has the potential to remain stickier here than in other parts of the developed world.
We remain cautious and positioned for the weaker economic conditions ahead. Our focus is on quality investments, liquid assets and active portfolio management which should put us in good stead to manage any volatility that may arise as the year progresses.
Boyce is a privately owned professional advisory company with 50 years of history in regional Australia. Since its establishment in1973, Boyce has been committed to delivering genuine care to clients through their comprehensive suite of financial and advisory services.
Over the past five decades, Boyce has built a strong reputation for its care, experience, knowledge, and dedication to client success. With offices and team members in regional centres and capital cities, Boyce bridges the gap between rural and city Australia.
Since its inception, Boyce has been at the forefront of embracing innovation and technologies that benefit their clients and team. By combining a deep understanding of financial regulations and market trends with advanced analytical tools, Boyce has been able to provide meaningful information, simply stated, to help clients navigate complex financial landscapes and achieve their business and personal goals.
We look forward to celebrating this milestone with our team later this year. Keep an eye on our socials to keep updated with our celebrations.
In the fine words of Boyce's founding partner "The first rule of service is to 'care for your clients'". Caring for our clients is what we live and breathe and continue to do as we partner with generations to thrive.
Market Update - September Summary
21 September 2023
Your Market Update - September Summary
Positioning for economic slowdown
The much-anticipated slowdown in economic growth appears to be upon us, with Gross Domestic Product (GDP) in Australia slowing to 2.3%. While only slightly below long-term trend GDP at this point, it is the direction and speed of travel that counts. Discretionary spending has eased (-1.0%), as cost of living pressures finally hit the consumer. Perhaps not surprisingly, the slowdown is being felt most in the more expensive housing markets of NSW and Victoria, where high house prices translate into high mortgage costs.
As reporting season wraps up, the picture is also becoming clearer for corporates. Earnings have come down, but not by as much as expected which has pleased equity markets. There have been good reasons why earnings have been so resilient to date; from very tight labour markets to consumers being flush with covid cash buffers and businesses, in many cases, able to pass on rising input costs. Looking forward, however, earnings growth looks harder to come by in 2024 as these tailwinds ease. The impact of rising rates, tighter credit conditions and higher costs are indeed feeding through the economy albeit with a long lag.
Our base case remains that Australia will avoid recession thanks to a significant rebound in migration this year and the continued demand for our resources as the global economy continues its decarbonisation path. Inflation continues to soften slowly, with the latest headline number coming in at 4.9%. It’s still a long way away from the central bank’s target range of 2-3%. The RBA has kept rates on hold for a second month in a row but remains on alert as inflation has the potential to remain stickier here than in other parts of the developed world.
We remain cautious and positioned for the weaker economic conditions ahead. Our focus is on quality investments, liquid assets and active portfolio management which should put us in good stead to manage any volatility that may arise as the year progresses.
Market Developments during August 2023
Australian Equities
The S&P/ASX 200 Accumulation Index fell 0.7% in August, as earnings results dampened market returns. Of the 11 sectors, only Consumer Discretionary (+5.7%), Property (+2.3%) and Energy (+0.5%) had positive returns for the month, while Utilities (-3.9%) and Consumer Staples (-3.2%) were the biggest drags on the Index.
Share prices battled with a combination of mixed earnings results and a conservative outlook for companies, while soft economic data out of China continued to weigh on local investors.
Consumer Discretionary was the standout performer for the month, benefitting from resilient consumers. Given the continued strain on households through a higher cost-of-living, many companies in the sector had flagged headwinds in the months leading into reporting season, with a conservative outlook already baked into share prices. Another theme to emerge from earnings reports is the ability for companies to manage cost pressures, particularly those brought about through higher financing rates. Despite revenue growth, Consumer Staples reported disappointing profit results, leading to their waning share prices. More broadly, the sustained impact of a slowing Chinese economy was seen across the market, particularly Materials.
Global Equities
Primarily negative economic data in August resulted in a rise in bond yields and a decrease in equity markets. With renewed investor concerns, US equities stumbled with the S&P500 Index declining -1.6% (in local currency terms) during the month.
Most sectors across Europe fell, with the DAX 30 Index returning -3.0% (in local currency terms) for the month. Energy was one of the sole positive contributors, inflation has remained stable but is yet to decline below previous months levels. The European Central Bank’s next meeting will be a watch point for investors.
China experienced some of the sharpest declines for the month with a potentially challenged real estate sector. Investor concerns around stimulus deployment largely contributed to this decline, with the CSI 300 Index returning -6.0% (in local currency terms) for the month (in local currency terms).
Fixed Interest
In their August meeting, the Reserve Bank of Australia have for the second time elected to pause rate hikes and leave the target cash rate at 4.10%, citing slowing economic growth and pressure on household budgets. The Australian bond market reacted mildly, with Australian 2- and 10- Year Bond yields falling 23bps and 3bps respectively over the course of the month. The Australian yield curve continued to flatten throughout August, and the Bloomberg AusBond Bank Bill Index returned 0.37%.
Markets expected – and received - a similar story in September, with the RBA holding rates steady. RBA Governor Philip Lowe’s tenure has now ended, and the position will be headed by his deputy Michele Bullock.
In the US, the Federal Funds Rate remains at 5.25%-5.50% following the most recent July rate hike, with the Fed’s first rate cut being priced into futures contracts by March 2024. The Bloomberg Barclays Global Aggregate Index (AUD) returned 2.62% over the month, and US 2- and 10-Year Treasury yields rose 1bp and 15bps respectively. In the UK, the interest rate is similarly at 5.25% after the BoE hiked by 25bps in their August 2 meeting, resulting in UK Gilt yields rising over the month.
REIT’s (listed property securities)
The S&P/ASX 200 A-REIT Accumulation Index finished +2.3% higher in the month of August as the A-REIT sector continued its consolidation in recent months. In contrast, the Global Real Estate Equities market (represented by the FTSE EPRA/NAREIT Developed Ex Australia Index (AUD Hedged) finished lower (-2.7%). The Australian Infrastructure sector (as represented by the S&P/ASX Infrastructure Index) finished -2.8% lower.
The Australian residential property market experienced an increase by +0.1% Month on Month (as represented by CoreLogic’s five capital city aggregate). Brisbane was the biggest riser (+1.5%), followed by Adelaide (+1.1%). Over the one-year period, Perth was the largest gainer (+4.5%). In contrast, Hobart (-0.1%) was the only city to deliver negative returns in the month of August. Similarly, Hobart has the lowest percentage change year on year (-10.0%).
Market Update - August Summary
18 August 2023
Your Market Update - August Summary
Bonds vs Equities – what are the capital markets trying to tell us?
Bond markets across a number of developed countries including the US, UK and Germany are currently pricing in a recession. Global stock indices are close to, if not at, all-time highs. What exactly are the capital markets trying to tell us about the state of the economy?
Stock prices are a well-known leading indicator of the business cycle and future economic growth. They are among a handful of leading economic indicators (LEI) that analysts typically follow when trying to get an overall view of economic activity. Stock prices have been on a winning streak this year, with global equities as measured by the MSCI World TR Index AUD up 16% over the 6 months to 31 July 2023. The rally has been led by the US where the launch of artificial intelligence technologies such as ChatGPT, have created enormous buzz and excitement around potential productivity gains.
Bond markets are taking a much more negative view. Taking the 10-year to two-year Treasury spread, yield curves in the US, UK and Germany are currently inverted. In Australia, the yield curve, while not yet inverted, is flat by historical standards. Inverted yield curves are typically good indicators that recession looms. Inverted yield curves reflect the expectation from bond investors that longer-term interest rates will fall; a situation typically associated with recessions.
So are bond or equity investors right? Inverted yield curves, while pretty reliable indicators, can and do give false signals from time to time. Equity markets too, can be prone to over-optimism, often overshooting fundamentals based on sentiment. Weighing the conflicting signals, our view is that we are headed for a period of weaker growth. The equity market rally to date has been narrow and centred around US mega tech stocks. Should we see greater breadth and participation in this rally, we may have cause to reconsider. Putting stock prices aside, most other leading indicators are pointing to a further slowdown in the business cycle. Consumer sentiment is extremely low, housing starts are weak, money supply is tightening and Purchasing Manager Indices remain in contractionary territory. These data points lead us to believe that the second half of 2023 continues to present some headwinds for the economy and risk assets in general.
Market Developments during July 2023
Australian Equities
The S&P/ASX 200 Accumulation Index finished July up 2.9%, the second-best monthly performance for the index this year. Commodity price rises aided the gains, while consumer sentiment has improved with positive inflation and employment data releases. In all, 9 of the 11 Sectors in the Index finished positively, with Health Care (-1.5%) and Consumer Staples (-1.0%) the only laggards.
The driving factor in the Energy sector (+8.8%) was rising commodity prices, particularly oil. This was particularly evident in Woodside (ASX: WDS), which also benefitted from a quarterly update that was received positively by investors.
Meanwhile, the other monthly leader, Financials ex-Property, (+4.9%) saw investors pile into the “Big 4” banks all having strong months in July. While the RBA has left rates on hold, the banks have continued to increase their rates for home loan borrowers. Investors expect the rate rises from the lenders to ease competition and lead to higher net interest margins.
Global Equities
Global equities ended with a predominantly positive month with stabilising economic data. Emerging markets outperformed developed market counterparts returning 4.9% (MSCI Emerging Markets Index (AUD)) versus a 2.1% gain according to the MSCI World Ex Australia Index (AUD).
The U.S. markets had mixed results again, with inflation data falling in line with another expected rate hike. Most sectors were positive with standouts in Technology and Energy rising largely due to increased strength in suppliers. The S&P500 Index posted a gain of 3.2% (in local currency terms).
Emerging markets rallied strongest for the month, as China’s economic growth recovery plan continues, with new stimulus having positive effects across sectors; specifically manufacturing and real estate as indicated by development data. The CSI 300 Index returned 5.3% for the month (in local currency terms).
Fixed Interest
The RBA has left the cash rate on hold at its July meeting at 4.1%, pausing what has been an aggressive rate hiking cycle. The market responded with Australian 2-Year and 10-Year bond yields remaining elevated and rising by 4bps and 5bps respectively. Fixed income markets started to see some gains, with the Bloomberg AusBond Composite 0+ Yr Index returning 0.5% over the month.
In the US, bond markets continue to price the possibility of a recession and the US yield curve is inverted. The Federal Reserve raised rates in July by 25bps, lifting the benchmark rate to 5.25-5.5%, which is the highest this range has been in 22 years. The market responded with US 10-Year and 2-Year Treasury yields rising by 15bps and 9bps, respectively. Globally, higher yields led to losses in fixed income markets, with the Bloomberg Barclays Global Aggregate Index (AUD) returning -0.5% over July.
REIT’s (listed property securities)
The S&P/ASX 200 A-REIT Accumulation index advanced during July, with the index finishing the month 3.8% higher. Global real estate equities (represented by the FTSE EPRA/NAREIT Developed Ex Australia Index (AUD Hedged)) also finished strongly, advancing 3.2% for the month. Australian infrastructure performed well during July, with the S&P/ASX Infrastructure Index TR advancing 4.1% for the month and up 13.2% YTD.
The Australian residential property market experienced an increase of +0.9% Month on Month (as represented by CoreLogic’s five capital city aggregate). Brisbane and Adelaide were the biggest movers (both +1.4%) with Perth (+1%) also performing strongly. All five capital cities performed positively for the third consecutive month.