RBA Recap

• The RBA continued their tightening cycle with another 50 basis point hike in August.
• There is now a delicate balance between addressing inflation and ensuring the economy is not adversely effects. This is now the core objective of the RBA.
• Moving forward, the RBA will have more latitude in balancing their objectives.

Market Dynamic

• Market liquidity has increased due to seasonal and dynamic changes.
• Term deposit and NCD rates have been volatile as reference rates bounce around and inflation expectations are revised.
• The yield curve has flattened, as longer dated rates fall.

Investing Considerations

• Investors should look at the weighted average return of their portfolio to improve their performance in a rising interest rate environment.
• The current yield curve is very accommodating for longer investments and allows investors to maximise their returns, whilst still mitigating interest rate risk.

The Australian Economy

• Consumer confidence is down as the pinch of inflation and tighter monetary policy conditions kick in.
• Business conditions and confidence has increased for the first time in a couple of months reporting an increase in profitability, and labour costs. They are in a better position than ever to pass on costs to the consumer.

Inflation is still present in the Australian economy yet might not be as embedded as feared.

Please click here to download the August Monthly