Australian Bond Exchange

Australian Bond Exchange Weekly Newsletter

28 October 2022

ABE Weekly 28 October 22

 Key Points

  • Labor’s first budget in a decade since victory 
  • Australian Bureau of Statistics releases CPI figures 
  • Great Britain has a new PM
  • Xi Jinping secured third term as a leader
  • Current investment opportunities  


Treasurer Jim Chalmers has delivered Labor’s first budget in a decade since its election victory in May. The key initiatives of the Budget include: $4.7bn for child care, $3.1bn for aged care, $2.4 bn for NBN, $1.2bn for regional connectivity and the plan to build one million new homes over the next five years.  

One of the keys focuses of the government’s budget and its election campaign is it’s $4.7 billion spend on child care over the next four years. The changes will provide more generous subsidies to families and raise the maximum subsidy rate cap to 90 per cent.   

Australia’s aged care sector will receive $2.5 billion over four years to improve the quality of care for residents and 1 million new homes are expected to be built over five years from 2024 – an ambitious goal of the government. However, data shows 985,085 dwellings were completed in the five years to March 2022.  

Ahead of October’s Budget 2022, it was announced that the deficit had narrowed to $32.0bn in 2021/22, a huge improvement from 2020/21’s COVID-related deficit of $134.2bn. However, the deficit will rise from $32.0bn in 2021/22 to $51.3bn 2024/25, meaning that net debt will rise to 28.5% of GDP in 2025/26 from 22.5% in 2021/22. It is expected that GDP growth will be 1.5% in 2023/24 as the country experiences a sharp economic slowdown due to aggressive interest rate hikes by the RBA and other central banks to slow down inflation.  

On Wednesday, the Australian Bureau of Statistics (ABS) show that in the September quarter, the consumer price index (CPI) rose 1.8 per cent to an annual rate of 7.3 per cent, the steepest annual rise since 1990. Strong price rises were seen across all food and non-food grocery products. These increases reflected a range of price pressures including supply chain disruptions, weather-related events, such as flooding, and increased transport and input costs. In the 12 months to the September quarter, fruit and vegetables prices rose 16.2% and dairy products increased 12.1% – Australian Bureau of Statistics, 2022. 


Great Britain has a new Prime Minister, Rishi Sunak and Xi Jinping secured a third term as leader of China. China’s foreign policy will continue to be “aggressive and assertive” as the president sees this time as an “opportunity for China’s national rejuvenation,” according to former Chinese diplomat Han Yang.  

Sunak has taken over from Truss as Prime Minister on Tuesday. He faces numerous crises left over from his predecessors, with inflation rates not seen since the 1980s being the most daunting task. In addition to the country’s economic challenges, Sunak will also have to contend with Russia’s ongoing invasion of Ukraine.  

Current Investment Opportunities 

 With global tightening cycle underway, the Australian economy is emerging as a “safer haven” for bond investors to withstand the challenges of high inflation.  

ABE is pleased to announce that we finally have an allocation to Under Armour Inc, after months of monitoring this position. Offering a fixed yield of 6.00% per annum until June 2026, it is a great opportunity to add a globally recognisable brand to your investment portfolio. 

Contact us to find out more details. 

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