ABX Weekly 26/02/2020

We have seen a considerable deterioration globally in the spread of the Coronavirus which more and more is causing a slowdown in growth globally. It doesn’t really come to a great surprise to us bond investors and we have taken as usual a much more cautious view with bond yield once again falling globally. Stock markets globally are finally having a long overdue correction with the risk-off trade gaining strong momentum causing strong falls in share prices over the past couple of days. 

 

This week the big economic news in Australia was the unemployment rate which jumped to 5.3% in January, up from 5.1% in the previous month, seasonally adjusted data from the Australian Bureau of Statistics showed. The main reason why the unemployment rate is still on the rise is largely because of an increase in the participation rate (which is the percentage of the population over 15 who are either in work or looking for it). However, to put it into a bigger picture the rate is at an all-time high and more people than ever want a job. 

 

On the back of this we saw the A$ falling further to a decade low and yields on the 10y Government benchmark falling once again below 1%. 

 

Our investors on the other hand had some great news this week. The QMS Media 7% bond was paid out due to a takeover by Quadrant which triggered an early repayment clause. The total payout figure including accrued interest was over 108.00 which means that our investors enjoyed and fantastic return of over 7%. This once again highlights the benefits of having a direct bond portfolio which provides investors with peace of mind and secure and reliable income streams in a world full of uncertainties.