ABX Weekly 29th August 2018 Market update
- The S&P has broken out to a new high yet the VIX, the so-called fear index, is hovering significantly above its 52- week lows suggesting elevated uncertainty as the large-cap index continues to carve out new records
- We have seen good buy flows in CNI 2021, NXT 2021, SYDAIR 2030 with inventory running low due to demand. Also dealt in the newly issued Commerzbank 2028 for long-term investors
- Investment Grade Corporates continue to borrow at extremely low levels. Today’s example is Optus launching a 5yr bond yielding at indicative pricing 3.50%
Focus on AUD:
AUD/USD dipped from 0.7360 to 0.7240 last Thursday on political instability with the Government leadership up in the air retracing its losses on Friday when Scott Morrison was announced to lead the Liberal Party and the new Prime Minister. Aussie may consolidate ahead of the next Reserve Bank of Australia meeting on September 4th as the central bank is widely expected to keep the official cash rate at the current record low.
Political headwinds may continue to drag on the Aussie as the ongoing shuffle within parliament limits the RBA’s scope to normalise monetary policy.
Swiss Desk:
German business confidence improved more than expected, with an iFO Index reading of 103.8 in August, up from 101.7 in July. This positive surprise was mainly because the US does not levy any further trade tariffs on German cars for the time being.
France lowered its 2019 economic growth forecast from 1.9% to 1.7% and unveiled plans to cut public spending to remain within EU budget commitments. On the other hand, comments from one of Italy’s deputy Prime Ministers that the government might breach the EU’s 3% cap on public deficits if the country needed to finance social spending lead to upward pressure on the yield of the Italian 10-year government bonds.
The European Central Bank reported that YoY growth in Eurozone money supply M3 eased to 4% in July from 4.5% in June, missing the expectations for 4.3% growth.
ABX Colour:
You may not know who the Prime Minister will be in a years’ time, but I can tell you exactly what you’ll earn on your bond investment.
Ask your ABX representative how to have more control on your investments on +61 2 8076 9343.
Visit our website https://www.bondexchange.com.au/ for more articles.
Follow Us @AusBondExchange
Find out more here: ABX weekly 29/08/2018
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.