16th January 2019
Market update
In the Australian share market the ASX200 has pushed through 5800 points but commentators are saying we will likely see some retracement, especially given lighter volumes at this time of year. Uncertainty remains in the UK, although the UK Parliament has certainly voted down Prime Minister Theresa May’s Brexit Bill in record numbers (432-202 against the Prime Minister’s bill). Calls are underway for a no confidence vote for May’s Government tomorrow. UK 10 year Gilt yields slipped around 4bps lower on the back of vote concerns. In Europe a speech by Mario Draghi of the ECB delivered his view that the Euro-zone economy is slowing, which pulled down the EUR overnight. Draghi’s comments were supported by a series of PMI figures across Europe in the past month that highlighted economic activity is in decline. It has diminished the prospect of a hike in interest rates from the ECB at any point this year with markets now factoring the chance at less than 40%, down from a 50/50 proposition earlier. German Bunds have rallied consequently, with 10 Year Bund yields retracing their recent climb to settle back at 0.20%. In Australian bond markets yields are slightly lower than a week ago and the differential remains between the US and Australia with 2-year yield: US 2.53% vs Australia 1.82% and 10-year yield: US 2.71% vs Australia 2.28% in early morning trading. We are seeing good trading in high yield corporate names where investors are achieving Yield to Maturity of 5-6%. Also seeing strong SSA flows among our institutional clients.
ABX Colour
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Market Movements
| ASSET | CURRENT | 1 Week change |
| Aus Cash Rate | 1.50 | 0.00 |
| 3M BBSW | 2.06 | -0.01 |
| Aus 3yr Gov | 1.79 | -0.02 |
| Aus 3yr Corp | 2.55 | 0.07 |
| Aus 3yr HY | 5.22 | 0.01 |
| US 10yr bonds | 2.70 | 0.03 |
| AUD | 0.72 | 0.01 |
| S&P 200 | 5775 | 155.23 |
ABX Bonds of interest
| Name | Issuer | Type | Maturity | Coupon |
| QMS Media Fixed 2022s | QMS MEDIA LTD | FIXED | 21-Nov-22 | 7.00% |
| NextDC Fixed 2022s | NEXTDC LTD | FIXED | 9-Jun-22 | 6.00% |
| Dicker Data FRN 2020s | DICKER DATA LTD | FLOATING | 26-Mar-20 | 3M BBSW +4.4% |
| Centuria Fixed 2021s | CENTURIA CAPITAL 2 FUND | FIXED | 21-Apr-21 | 7.00% |
| Centuria FRN 2021s | CENTURIA CAPITAL 2 FUND | FLOATING | 21-Apr-21 | 3M BBSW +4.5% |
| NextDC Fixed 2021s | NEXTDC LTD | FIXED | 9-Jun-21 | 6.25% |
Figure 1 (Source: ABX)
There has been significant demand in the above names. We continue to build interest in these names and others.