Credit updates:

  • Corporate bonds have continued to be well supported domestically as lack of supply continues to be a driving issue.
  • We have seen good buying interest in the 5-6% yielding bonds which offer a nice pick up to Term Deposits.
  • NextDC have announced a new round of investor meetings with the view to launching a new debt issue. There should be good appetite for this name given the performance of the business and their existing bonds in the secondary market. If the NextDC 2021 fixed rate bond cheapen as a result, then they also present value in the 3yr maturity bucket.

Macro comment:

The following factors were impacting bond pricing this week:

  • Benchmark US 10yr treasury tields are 6bps lower than a week ago at 2.89% as fears of a US/China trade war intensify and central banks globally have signalled a slightly more dovish tone.
  • Expectations of an RBA rate hike continue to be delayed with money markets now expecting the first hike no earlier than 2020
  • US Equities are being supported by the volatile technology sector that is trading at or near record highs, helped by hedge funds’ failed attempts to short the sector in the past year.

ABX Colour:

As mentioned in the macro commentary, the rising tension from the US/China trade war has clouded investment markets in uncertainty. With hundreds of billions of dollars’ worth of tariffs between the two superpowers this could hinder global economic growth, disrupt business supplies and stoke inflation.

Equity markets around the globe have been hit on this uncertainty. Secure your investments in a more stable market and invest in direct bonds locking in your returns. Holding fixed rate bonds to maturity locks in the return you gain on your investment today.

Call your ABX representative on +61 2 8076 9343 or visit our website https://www.bondexchange.com.au/ to
find out more

Follow Us @AusBondExchange

Weekly commentary on investments and bonds  ABX weekly 20/06/18

 

ABX weekly market insights

 

Australian Bond Exchange Pty. Ltd. (“ABX”) provides both general and specific financial product advice. This document and any information, advice or recommendation has been provided by ABX without taking account of your objectives, financial situation or needs. Because of this, you should before acting on any information, advice or recommendation from ABX consider the appropriateness of the information, advice or recommendation, having regard to your objectives, financial situation and needs. If this document, or any information, advice or recommendation, relates to the acquisition, or possible acquisition, of a particular financial product, you should obtain a product disclosure document relating to the product and consider the document before making any decision about whether to acquire the product. ABX, its directors, representatives, employees or related parties may have an interest in any companies or entities, or any financial product issued by companies and entities, and may earn revenue from the sale or purchase of any financial product, referred to in this document or in any information, advice or recommendation. Neither ABX, nor any of its directors, representatives, employees, or agents, make any representation or warranty as to the reliability, accuracy, or completeness, of this document or any information, advice or recommendation. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or any information, advice or recommendation. Any reference to credit ratings of companies, entities or financial products must only be relied upon by a “wholesale client” as that term is defined in the Corporations Act 2001 (Cth). ABX strongly recommends that you seek independent accounting, financial, taxation, and legal advice, tailored to your specific objectives, financial situation or needs, prior to making any investment decision. ABX does not make a market in the securities or products that may be referred to in this document.