9th January 2019
Market Update
Well after significant volatility heading into the year end, markets have been a bit calmer of late and there is some cautious optimism returning. US equities have had 3 days of gains. Market participants now wait to see if this is a simple bounce or the start of a recovery. The US FOMC Minutes are released tomorrow, and US Federal Reserve Jerome Powell speaks on Friday, so markets will be observing the commentary from both. Negotiations over trade continue between the US and China in Beijing and reports indicate positive progress is being made. In the UK where negotiations over Brexit are also continuing the view is less optimistic. A no-deal Brexit remains a possibility. The Aussie is trading at around 71.40 US cents. In Australian bond markets the differential remains between the US and Australia with 2-year yield: US 2.58% vs Australia 1.83% and 10-year yield: US 2.71% vs Australia 2.30% in early morning trading. Yesterday, Commonwealth Bank of Australia (CBA) raised $2.8 billion from a new 5-year bond. Regarding government bonds the Australian Office of Financial Management (AOFM) announced “Treasury Bond issuance for the year is now expected to be around $52 billion compared with around $70 billion expected at the time of the 2018-19 Budget … $30.3 billion of Treasury Bonds have been issued to date this year.” Discussion has arisen about a potential Reserve Bank of Australia (RBA) rate cut in May if banks hike rates out of cycle due to lending vs borrowing costs, but the RBA is generally expected to hold rates steady for now.
ABX Colour
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Market Movements
| ASSET | CURRENT | 1 Week change |
| Aus Cash Rate | 1.50 | 0.00 |
| 3M BBSW | 2.06 | -0.03 |
| Aus 3yr Gov | 1.85 | -0.08 |
| Aus 3yr Corp | 2.52 | 0.04 |
| Aus 3yr HY | 5.21 | -0.03 |
| US 10yr bonds | 2.72 | 0.04 |
| AUD | 0.71 | 0.01 |
| S&P 200 | 5681 | 14.33 |
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.