NEWS
18 Sep 2026 - Hedge Clippings |18 September 2026
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Hedge Clippings | 18 September 2026 Higher for Longer, Whether We Like It or Not News | Insights Market Commentary | Glenmore Asset Management What the headlines are missing on private credit | Magellan Investment Partners August 2026 Performance News Airlie Australian Share Fund Active ETF (ASX:AASF) |
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11 Sep 2026 - Hedge Clippings | 11 September 2026
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Hedge Clippings | 11 September 2026 Oil closed above $100 again this week on the back of tit-for-tat strikes in the Strait of Hormuz, with Australia more exposed to the price of oil than almost any other developed economy. The RBA's deputy governor told the ABC that the country is "furious" about inflation for good reason, while in the US, strong job numbers and tonight's CPI figure are reshaping the case for a September hike. Oil is back above $100 on direct strikes against Iranian tankers, while Australia consumes more diesel per person than any other OECD economy Brent crude settled above $100 a barrel this week after US Central Command confirmed American forces destroyed Iranian oil tankers in the Gulf of Oman and near Kharg Island, Iran's primary export hub, while Iranian backed Houthis separately attacked Saudi energy facilities. It is Brent's first close above $100 since July, and Iran has vowed to intensify attacks if US strikes continue, a genuine escalation rather than the on-again, off-again diplomacy Hedge Clippings has tracked for months. US diesel hit a record US$5.94 a gallon on the news. The number matters disproportionately for Australia: per OECD data, Australia consumes 1.10 tons of oil equivalent of diesel per capita per annum, the highest of any OECD country and well above the 0.64 average, while CBA research puts Australian diesel consumption at 7.67 barrels per capita, roughly 80% higher than the US and eight times China's. Only around 13% of Australia's diesel is refined domestically, making it one of the world's largest diesel importers, with road transport, mining and agriculture together accounting for the bulk of demand. Every prior Hormuz escalation has fed directly into Australian headline CPI with a lag of one to two months, because diesel touches freight, food logistics and construction costs before it shows up in a fuel bowser, and the CPI. This is not a story to file under "offshore geopolitics." It is a direct input to inflation that the RBA will react to at its next meeting. "People are furious about inflation": Deputy Governor Hauser was unusually blunt, and the market still isn't fully buying the hawkish part RBA Deputy Governor Andrew Hauser told the ABC's 7.30 report on Tuesday that inflation is the economy's "one big problem" and that Australians are, in his words, "furious about inflation": "Everywhere I go, I hear cost, cost, cost, inflation, inflation, inflation, and that's our responsibility. We have to put that right." He named three specific forces keeping inflation elevated, the Middle East crisis, the global AI driven investment boom, and weakness in the economy's supply potential, and made the tightening bias explicit: "We could raise interest rates sharply, we could do it tomorrow," though he stressed the board isn't at that point because it still wants to protect employment gains and avoid an unnecessarily hard landing. Assistant Governor Sarah Hunter made similar remarks the same day, reinforcing the message rather than softening it. Headline inflation stood at 3.5% to July, trimmed mean has been at 3.6% for three months in a row, and all four major banks are now forecasting a hike by year end. The genuine tension is that this is some of the most explicitly hawkish language from the RBA all year, delivered three weeks ahead of the 29-30 September board meeting. Hauser's own framing supports that read Australia is "doing quite well" on unemployment and real household incomes, in his words, which is precisely the kind of language a central bank uses when it wants markets to take a hike seriously without actually committing the board to one. The next inflation number is due the day after the September meeting ends, meaning the board will vote without the data point markets might expect it to wait for. Coordinated hawkish messaging from two RBA officials in one day, with more interviews and commentary due next week, and ahead of a meeting where the board won't have the freshest inflation data, looks like a deliberate attempt to do some of the tightening through language rather than the cash rate itself. The RBA's next real lever is action, not more interviews. US Payrolls blew past forecasts, oil is surging, and tonight's CPI result lands five days before the Fed decides US non-farm payrolls for August, released on September 4th, rose 162,000 against a forecast of just 55,000, the strongest number since March and the first month of net job gains in five months, with unemployment steady at 4.1% and prior months revised up a combined 55,000. That will be the last major inflation data before the Fed's 15-16 September meeting, with economists expecting headline inflation to accelerate to around 3.4% annually on rising energy costs, while core CPI eases to roughly 2.4%. Fed Chair Kevin Warsh used his Jackson Hole speech last month to make clear he isn't ready to declare victory, in his words, recent readings "do not tell me that underlying trends have meaningfully improved." Rate hike odds have whipsawed for exactly that reason, and Brent's move back above $100 this week, combined with the payrolls number, is the fresh input markets are now pricing into a decision that looked closer to settled a fortnight ago. A strong jobs report and an oil shock landing in the same fortnight is the least convenient combination for a Fed trying to justify a pause. If tonight's CPI shows the energy pass-through Warsh has been warning about, the "coin flip" Hedge Clippings described a week ago tips meaningfully back toward a hike before next week's decision. News | Insights
Infrastructure in focus: The burning infrastructure issue from wildfires | Magellan Investment Partners August 2026 Performance News Bennelong Australian Equities Fund Quay Global Real Estate Fund (Unhedged) Active ETF (ASX:QGRU) Bennelong Concentrated Australian Equities Fund |
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4 Sep 2026 - Hedge Clippings | 04 September 2026
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Hedge Clippings | 4th of September 2026 This week: Domestically, Long bond yields broke multi-year ceilings this week, as Australia's GDP result complicated rather than clarified the RBA's task, and the one place investors actually found reward in reporting season was the part of the market nobody was watching. US 10 year yields hit a 3 year high, Japan's crossed 3% for the first time since 1996, and both moves share the same root cause Long bond yields broke through multi-year ceilings on both sides of the Pacific this week. The US 10-year Treasury rose from 4.65% on 29 August to a three-year high of 4.818% on 3 September, before easing to around 4.74% overnight on dovish Fed commentary. Japan's 10-year JGB climbed from 2.83% to 3.02%, crossing 3% for the first time since 1996, before a strong 30-year auction steadied the market. Two forces are driving both moves. The first is fiscal and monetary. In Japan, concern is building around the Takaichi government's expansionary stance, while US Treasury Secretary Bessent reportedly told Bank of Japan Governor Ueda that Washington wants Japan to raise rates further. In the US, the implied probability of a rate hike next week after the FOMC meeting on 15th and 16th jumped from around 33% before Fed Chair Kevin Warsh's 28 August Jackson Hole speech, to 66% immediately after. The second is structural. Nomura chief macro strategist Naka Matsuzawa argued that AI hyperscalers' willingness to borrow at higher rates is lifting yields more broadly. An estimated US$1.5 trillion of AI-related corporate debt has been issued this year, competing with sovereign borrowing for capital, while core PCE inflation remains at 3.7%, well above the Fed's 2% target. The odds for a FED hike were around 63% to 66% before reversing sharply overnight as Fed Governor Christopher Waller said he would support holding rates steady if inflation continued to ease, sending CME FedWatch odds down to 50.4%. The next major test is tonight's August non-farm payrolls report, with about 56,000 jobs expected and unemployment forecast to remain at 4.1%. The US$730 billion hyperscaler capex story covered a fortnight ago and this week's bond sell-off are increasingly the same story. With a named strategist now linking AI borrowing directly to higher yields, the pressure looks structural rather than cyclical, meaning it may persist beyond the current rate cycle. That makes tonight's US payroll figures more consequential for Australian portfolios along with the RBA upcoming deliberations. Australian GDP beat forecasts, real wages are back to 2011 levels, and insolvencies are still running well above pre-pandemic norms The ABS Q2 National Accounts, released on Wednesday, showed GDP rising 0.4% for the quarter and 2.1% annually, above consensus forecasts of 0.3% and 1.8%, but below Q1's 2.5% annual pace. The composition was more hawkish than reassuring. Household consumption rose just 0.4%, with the ABS noting continued caution as higher Middle East-driven fuel and travel costs weighed on spending, while mining exports and government expenditure supported the headline result. Domestic cost pressures also remained firm: the final demand deflator accelerated from 0.5% to 0.8% and real unit labour costs rose 0.9%. Multiple economists concluded that another RBA hike could come as soon as this month. That sits uneasily beside the wages data. The June quarter Wage Price Index rose 3.2% annually, below headline CPI of 3.8% and trimmed mean inflation of 3.6%, leaving real wages lower for a third consecutive quarter. Economist Bill Mitchell estimates real wages are now 6.4% below their June 2020 level and back to their September 2011 purchasing power. Most of the decline occurred in 2022 and 2023, but recent quarters have extended it. Construction captures the tension most clearly. Despite persistent skills shortages and repeated RBA concern about capacity constraints, real wages in the sector are falling while insolvencies remain elevated. ASIC recorded 14,152 company insolvencies in FY2025-26, down from 14,722 in FY2024-25 but still around 73% above the pre-COVID baseline of roughly 8,200. Construction remained the largest contributor, with 3,472 external administrations on ASIC's Series 1 count to 9 August, although that was 3.4% lower than the prior year. Bathla's well documented woes won't assist unless an unlikely rescue package eventuates. Reporting Season: While large caps went nowhere, small caps had their best reporting season in years: our conversation with Cyan's Dean Fergie
One example he gave was Janus Electric Holdings (ASX: JNS), which has risen from 20 cents at a capital raise backed by Cyan to a 52-week high of 67 cents and a market capitalisation of about ~$100 million. The company reported FY2026 revenue of $1.7 million but is targeting roughly $50 million, with the investment case centred on converting diesel truck fleets in California to exchangeable battery power under supportive state incentives. Another holding, BLS Pharmaceuticals (ASX: BLS), increased revenue about 150% from $29.3 million in FY2025 to $75 million, alongside roughly $20 million of EBITDA. Despite weak consumer confidence, higher rates and bond yields, the Middle East conflict and falling property prices, Fergie argues small caps can still provide company-specific opportunities: "That's the beauty of small caps, you can look anywhere for businesses that can perform even in a bad economy." News | Insights Manager Insights | Cyan Investment Management Property Update | Australian Secure Capital Fund July 2026 Performance News |
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28 Aug 2026 - Hedge Clippings | 28 August 2026
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Hedge Clippings | 28 August 2026 This week: Sticky inflation keeps the RBA's boot on the throat of leveraged borrowers, and a $3.2 billion Sydney developer which finally buckled under a mountain of debt leads to private credit funds restricting redemptions. Trimmed mean stuck at 3.6% for a third month The July CPI data surprised consensus expectations, but broadly matched those of Seed Funds Management's Nick Chaplin. Headline inflation eased to 3.5% from 3.8% in June, above the 3.2-3.3% consensus, while trimmed mean inflation held at 3.6% for a third month. Chaplin said forecasts underweighted the partial reversal of fuel excise relief, with automotive fuel prices rising 7.5% in July, alongside persistent rental inflation. Three of the big four banks now expect the RBA to raise rates by 25 basis points in September, with another increase possible before Christmas. Chaplin argues the RBA should instead raise rates by 40 basis points on 29 September, given inflation has remained above the 2-3% target band for more than four years. Chaplin also questioned whether the 4.5% unemployment rate fully reflects private-sector labour conditions given rising government employment, suggesting the RBA has greater scope to tighten. In his view, returning inflation to target may require weaker economic conditions, with property a likely pressure point. The bottom line is that the RBA hasn't taken the hard decisions required to bring inflation back into their target band, seemingly hoping that "talk the talk" will work more than having to "walk the walk". Currently, the RBA is not expecting their strategy to succeed until late next year or maybe they're hoping the government's taxation changes will do the job for them, while not wanting to say so publicly. Whether or not the RBA agrees with Chaplin's 40 basis point prescription, the property market is already doing some of the tightening for it. Bathla Group's $3.2 billion in debt finally gave way As has been well reported in the AFR and financial news sites, Bathla Group, a family-owned Western Sydney developer founded in 1997, entered voluntary administration on 25 August. The bottom line is that it owes most of its $3 bn plus debt to private credit funds rather than banks. Bathla now joins Jon Adgemis, whose hospitality operation collapsed in November 2024 with over $1.8 bn in debt, much of it from private credit funds, as a major problem for the private credit sector and its investors. ASIC now warns of "the first significant cracks" in Australian private credit According to per EY estimates, Australia's private credit market has grown from around $35 bn in 2015 to roughly $213 bn by the end of 2024, a more than sixfold expansion that has outpaced the market's exposure to a genuine credit cycle until now. ASIC has been concerned for some time about Private Markets, and the Private Credit sector in particular. The response is now visible across the sector with an increasing number of Australian non-bank lenders, including Merricks, Longreach Credit, Centuria Bass and CVS Lane, restricting investor redemptions as they run into their own liquidity constraints. The problem for the Private Credit sector as a whole is the risk of "redemption contagion" as evidenced by ASX listed MA Financial announcing this week that redemptions from one of their funds would be limited to 1% per month. Although property debt makes up a significant component of the sector, private credit covers a wide range of underlying assets as well as property, including corporate loans, and equipment and asset backed lending. Simply put, not all private credit is the same. Many funds specifically exclude lending for property or property development from their investment mandate. However, they still face the risk of redemptions either through investor misunderstanding the underlying assets, or those redeeming from an open fund simply because they need to, and can't access their investment in a restricted fund. Alternatively, some will make a general move to cash or more liquid listed assets simply as a precaution. While it is prudent for a manager to retain a sensible level of cash to provide liquidity for redemptions, the amount has to be carefully managed. Too much can lead to a "cash drag" on performance, while too little risks imposing restrictions, as are being experienced at present. For the investor there are some basic rules of investing in private credit and private markets in general:
This is exactly the risk highlighted in the FundMonitors Income and Credit review: appraisal-priced credit can report Sharpe ratios above 12 because infrequent valuations suppress reported volatility. A redemption run exposes the gap between reported smoothness and actual liquidity risk. News | Insights Expert Analysis of Australia's July CPI Result Manager Insights | Coller Capital July 2026 Performance News Bennelong Emerging Companies Fund |
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21 Aug 2026 - Hedge Clippings | 21 August 2026
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Hedge Clippings | 21 August 2026 Unemployment back to April's post-COVID high, real wages going backwards on both sides of the Pacific, and a US Treasury bond buyback that was unwound within a day of being announced, while the war it was reacting to kept getting worse, not better. Unemployment hits 4.5% again, the highest of the post-COVID era Thursday's Labour Force release showed seasonally adjusted unemployment rising to 4.5% in July, up from 4.4% in both May and June, and back to May's number, the highest reading of the post-COVID era in trend terms. Employment fell by 15,800 mainly driven by a fall of 32,200 part-time jobs, and total hours worked fell by 1 million, although still 21 million hours higher than a year ago. Participation eased to 66.9% from 67.0%. This is the labour market evidence, alongside the July CPI data due next Wednesday, that will be on the agenda when the RBA next meets on 29 September. Despite the softer July employment number, the RBA reportedly still views the labour market as a little tight even though it has been steadily rising since the post COVID low of 3.4% in July 2022. Economists now rate a September rate hike as extremely unlikely rather than impossible, while the chances of a rate cut - not even contemplated by the board at the RBA's last meeting - would also seem unlikely unless July's CPI surprises on the downside, or consumer sentiment falls further thanks to the budget's tax changes. Anecdotal evidence suggests that the unemployment rate will continue to rise, particularly given the decline in the property market and the resultant sharp fall in mortgage processing by the big banks, and which are already flowing through to those employed in related fields such as conveyancing. While some are pointing to three consecutive rate rises from the RBA as the cause, only "Melons" Albanese and Jim Chalmers are denying that the budget changes are partly responsible. A fourth straight month of underemployment above 6%, with full-time growth offset by a bigger fall in part-time hours, isn't a labour market falling off a cliff. The housing market losing momentum will also add to the areas the RBA will be watching closely. US$40 trillion in debt, 30 year yields at 19 year high, and a bond buyback that didn't survive the day Total US public debt outstanding topped US$40 trillion for the first time on 19 August, the same day the 30-year Treasury yield hit its highest level since 2007 amid the renewed Middle East escalation and a deteriorating fiscal outlook. The US Treasury responded with a surprise announcement doubling its long-dated bond buyback size from US$2 billion to at least US$4 billion per operation, effective 9 September through 4 November, its second intervention this month. Yields fell sharply on the announcement, the 30 year down 9 basis points to 5.196%, but the relief didn't last: by Thursday the 30 yield had risen over 7 basis points to as much as 5.27%, erasing the prior day's move entirely. Treasury Secretary Scott Bessent called it a "big tool kit," and Trump, asked if Americans should worry about the bond market, said simply, "No, I don't think so." A buyback fully unwound within 24 hours is a useful data point on its own: it tells you the market's real concern isn't liquidity, it's the underlying fiscal trajectory, which no buyback programme actually fixes. Term premium, not plumbing, is doing the work here. Day 173: the war that was meant to last weeks now has the UAE watching for ballistic missiles, while Trump threatens US ally Oman. The US-Israel war on Iran, now in its sixth month, escalated rather than resolved this week. The UAE reported detecting two ballistic missiles launched toward the country from Iran, Israel struck an airbase in Syria's Idlib province, drawing condemnation from both the US and Turkey, and Trump posted an image of the Strait of Hormuz labelled "New US territory" after Iran restated its core demands for reopening it. Trump separately said no talks were underway, a day after suggesting a back channel had opened with Iran's Revolutionary Guard Corps. Oil climbed to its highest level since July as hopes of a near-term resolution faded again, the fourth such reversal since February. Every prior "close to a deal" moment in this conflict has been followed by escalation within days. Markets pricing imminent resolution are trading the headline, not the pattern. The pattern, five months running, is escalation, with Trump seemingly running out of options - and time - prior to the mid-term elections. News | Insights Manager Insights | Sharpbridge Funds Management Great technology, poor return | Insync Fund Managers Market Commentary | Glenmore Asset Management July 2026 Performance News Bennelong Long Short Equity Fund |
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14 Aug 2026 - Hedge Clippings | 14 August 2026
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Hedge Clippings | 14 August 2026 The RBA held, as priced, but the sharper stories this week sit underneath it: gold's brutal round trip, a Chinese economy still stuck in deflation, and an open fight over who actually controls $4.5 trillion of Australian superannuation. RBA holds at 4.35%: why 2 to 3% is a late-2027 story, and why the board just named an unresolved war as the reason
The RBA is now running an explicit eighteen month timeline to target and openly naming an unresolved war as the reason it can't commit to more certainty. Every Hormuz headline is now effectively Australian monetary policy news. US CPI cools for a second month, but the number that matters is negative: wages US headline CPI rose 0.1% in July, easing the annual rate to 3.4%. Core CPI eased to 2.5%, a five-month low, both in line with consensus. Shelter, the most stubborn line item all year, rose just 0.1%, while gasoline fell 2.9% for the month despite remaining up 24.6% annually. The more uncomfortable number sits beneath the headline: average hourly earnings growth of 3.2% is now running below CPI, real wages have gone backwards for four consecutive months. Navy Federal's Heather Long called this "the key issue" for middle and lower income households. The Fed doesn't meet again until 16 September, and this in-line print removes any near-term pressure to act. Australia and the US are running near-identical scripts: gradual disinflation, a central bank in no hurry to move, and a real economy still absorbing the lagged cost of the price level itself, not just its rate of change. Canberra wants your super fund to think like a sovereign wealth fund. The industry's answer, so far, is no. At the AFR's Superannuation Lending Roundtable, Prime Minister Albanese told a room of major fund and bank CEOs there was "real potential" to treat the country's $4.5 trillion superannuation pool as "a national asset," pushing funds toward more domestic business lending and framing offshore super investment as "hard money to provide soft power." The response was immediate: Westpac chief executive Anthony Miller told the Prime Minister directly to "not touch the super complex, don't direct it, don't tell it where to go." UniSuper's Peter Pearce separately noted Australia's private credit market is simply too small to absorb much more domestic capital without compromising diversification, the same structural constraint our own Income and Credit review identifies. The debate remains unresolved, and it now sits alongside a sharper enforcement signal: ASIC posted a record $830 million in civil penalties for FY2025-26, an eightfold increase on the prior year, with member services failures and misleading conduct as explicit ongoing priorities. A trustee's sole legal duty is members' best financial interests, not national economic objectives. Any real move toward directed lending needs a mandate change, not a roundtable request, and trustees who bend to informal pressure without one are taking on genuine legal risk. The PM, a podcast, and Japanese melons
Anthony Albanese's July appearance on Nikki Osborne's Bush Deep podcast is still making headlines. First came an apology over a "shag, marry, date" segment involving Kylie Minogue. Now a second clip has resurfaced, with Albanese criticised for embracing a suggestive joke about a pair of melons gifted by Japan's female prime minister. Diplomacy, apparently, is easier than podcasting, particularly over a bottle of whiskey. Australian Equities and Real Assets: two more chapters of the FY2026 review, live now Includes 368 funds across five peer groups. The headline findings: 65% of Australian large cap funds finished below the ASX 200, while Infrastructure returned +12.45% against just +0.99% for Property. Across identical infrastructure portfolios, hedged classes outperformed their unhedged twins by an average +7.45%, making currency positioning one of the year's biggest differentiators. Full detail, fund by fund, in the reports. Australian Equities Peer Group Review Real Assets Review - Property & Infrastructure News | Insights Expert Analysis of the RBA's Aug 11 Rate Decision Australian Secure Capital Fund - Property Update July 2026 Performance News Airlie Australian Share Fund Active ETF (ASX:AASF) Bennelong Concentrated Australian Equities Fund |
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7 Aug 2026 - Hedge Clippings | 07 August 2026
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Hedge Clippings | 07 August 2026 This week: Domestically, a trade surprise and an RBA decision already priced in by the market. Offshore, a possible end to the five month Hormuz standoff, and a genuine split forming in how markets are pricing the AI capex build out. Plus, two further FY2026 AFM Peer Group Reviews, and Friday's brief item. The RBA meets next Tuesday: a hold is priced in, and Thursday's trade surprise reinforces the case The RBA's Monetary Policy Board meets next Monday and Tuesday, with the decision due at 2:30 on Tuesday afternoon. Following the softer than expected Q2 CPI, all four major banks now forecast a hold at 4.35%, with Westpac dropping its earlier hike call. Market pricing still assigns roughly 20 to 30% to a surprise hike, since trimmed mean at 3.6% remains above target and Governor Bullock has said the board is "prepared to act as required." The RBA will meet without the benefit of knowing the July CPI result, not due until the 26th of August, and which won't include the re-introduction of the full fuel excise levy of 53.7 cents per liter from the third of August. The RBA's following meeting, due on the 28th and 29th of September, will also be without the CPI result, not due until the following day. By that time the slow-down in the property market should have impacted consumer confidence and spending sufficiently to offset the fuel price increase Thursday's trade data added a supportive point for the doves: a A$1.93 bn surplus in June, reversing May's A$2.37 bn deficit, on a 9.6% jump in exports led by iron ore, coal, LNG and gold, while imports fell as fuel costs eased. The outlook favours a hold, but watch the Statement on Monetary Policy's language on housing and the labour market, not the decision itself, for the real signal for September.
Five months on, a Hormuz deal is close again, and markets are already pricing it as real Iran and Oman say they are in the "final stage" of a framework for a safe shipping corridor through the Strait of Hormuz, and Trump said this week a formal announcement could land "as early as Wednesday." Markets have effectively pre-traded the news: the S&P 500 and Dow both set records on 4th of August, and Brent has settled back to around $79 a barrel. But this is the same conflict that has produced an interim deal, a collapse, a naval blockade, and multiple missed deadlines since February, and Wednesday's optimism sat alongside a Houthi claimed attack on a Saudi tanker in the Red Sea the same day. Any final deal is also contingent on the US lifting its port blockade, a concession Washington has resisted conceding as a unilateral move. Five months of stop-start diplomacy is a pattern, not a prelude. Markets pricing this as resolved carry genuine reversal risk if the deal slips again, as it has twice already. For Australian portfolios, sustained oil relief still matters most through the RBA's disinflation path, not through direct energy exposure. US$730 bn in hyperscaler capex, and markets are finally pricing the difference between spending and proof Amazon, Alphabet, Microsoft and Meta have guided to a combined US$730 billion in capital expenditure in 2026, up roughly 78% from $410 billion in 2025, and nearly triple 2024's spend, almost entirely on AI infrastructure and data centres. The market's reaction to that number has stopped being uniform. When Alphabet raised its capex guidance to US$200 billion alongside Q2 results in late July, its shares fell 7% in a session, dragging Amazon, Meta and Microsoft down with it, on investor concern about debt funded buildouts with uncertain payback. Amazon's long-term debt rose 81% to US$119 billion in a single quarter, Alphabet's rose 111% to US$98 billion, and Alphabet turned free cash flow negative for the first time. A week later, Microsoft's own report reversed the mood entirely: Azure growth accelerated to 43%, the fastest since 2022, and the stock jumped 15.5% in a day. The difference was not the spending, it was whether the spending was visibly converting into revenue. This is the healthiest version of an AI bubble debate a market can have, discrimination by evidence rather than blanket enthusiasm or blanket panic. It doesn't resolve the aggregate question, US$730 billion still needs to earn a return eventually, but it means capital is no longer being allocated on narrative alone. Meanwhile Australia's Energy Minister and climate warrior Chris Bowen put his own stamp on the data centre/capex debate with a promise to veto any state plans to power the facilities with non-green energy. Where are the small scale nuclear plans when they're needed? A reminder that estimates hearings test everyone's attention span ACT Opposition Leader Mark Parton admitted texting "my job is boring" during a committee hearing. He denied a complaint alleging it was sent to a sex worker, but did not identify the recipient. The Commissioner for Standards dismissed the complaint. Some MPs just put their boredom in writing. Alternative Strategies and Income & Credit: two more chapters of the FY2026 review, live now Includes 361 funds across seven peer groups. The headline finding: appraisal priced credit reports Sharpe ratios up to 12.85 against 0.52 for market priced Australian bonds, a gap that reflects how rarely the asset is marked, not how little risk it carries. Full detail, fund by fund, in the reports. Diversified & Alternatives Strategies Report | Income & Credit Peer Group Report News | Insights Manager Insights | East Coast Capital Management 2026 mid-year update & outlook | 4D Infrastructure Investment Perspectives: How the US equity cycle ends | Quay Global Investors July 2026 Performance News |
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31 Jul 2026 - Hedge Clippings | 31 July 2026
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Hedge Clippings | 31 July 2026 Four separate data points landed this week and pointed in the same direction: housing demand is slowing more sharply than the RBA expected, while inflation undershot market and RBA forecasts. Apart from anything else, that just confirms what has been apparent since Phil Lowe's infamous 2021 guidance that rates wouldn't rise until 2024: the RBA is not a reliable predictor of the future. The RBA's housing dilemma, in one week: softer-than-expected CPI, a slowing market, and mortgage demand down 15%
In reality the data wasn't great - it was just not as bad as expected. This week connected four data points that had been sitting separately for months. NAB reported their home loan applications fell 15% in the June quarter, with early stress signs also appearing in business lending. That follows Westpac reporting in June that their average monthly home-loan applications in April and May were approximately 10% below the March-quarter average. Both point to the same cause: the government's ill-conceived CGT and negative gearing reforms, combined with three RBA hikes since February, have specifically targeted investor demand for established property, and the property market is responding exactly as expected - even if not forecast by either the Treasurer or the RBA. One day before the CPI release, Governor Michele Bullock told the Anika Foundation lunch in Sydney that the housing market had weakened more than the RBA's own May forecast expected, and that the board remained prepared to raise the cash rate further if needed. Then, on Wednesday, the actual data undercut that hawkish tone. Monthly headline CPI eased to 3.8% in the year to June and the monthly trimmed mean was unchanged at 3.6%, below market forecasts of 4.0% and 3.7%, respectively; on the RBA's preferred quarterly measure, trimmed-mean inflation rose 0.8% in the June quarter and 3.6% over the year, below the RBA's 3.8% forecast. Market-implied odds of an August hike fell from 21% to approximately 3%-4%, while three-year government bond yields fell 10 basis points to 4.482%. The mortgage and CPI data are consistent with tighter financial conditions restraining demand, although the evidence does not isolate the effects of tax reform from higher interest rates, weaker sentiment and broader uncertainty. That strengthens the case for the RBA Board to hold the cash rate in August. Whether the cash rate remains unchanged through year-end will depend on the broader flow of inflation, labour-market, spending and global economic data. Overseas the Fed's longest pause since 2008 coupled with Microsoft's biggest day in years The Fed held its benchmark rate at 3.50 to 3.75% for a fifth consecutive meeting on 29 July which is the longest pause since 2008. The 9-3 vote included three dissents from regional presidents pushing for a hike, and new Chair Kevin Warsh continued his deliberately ambiguous style, telling reporters markets should learn to "play the ball, not the referee." A day later, Microsoft delivered the single biggest one day gain of this earnings season: shares jumped 15.5%, adding roughly $450 bn in market value, after revenue hit $90 bn and Azure growth accelerated to 43%, its fastest pace since 2022. The result provided fresh evidence that Microsoft's AI and cloud spending was translating into revenue growth, and the rally spread to chipmakers, with Micron rising more than 18% and AMD about 13% in the same session. One earnings report does not settle the AI-capex debate, as Microsoft still expects approximately $175 bn of capital expenditure in calendar 2026, but it gave investors a material data point after months of scepticism about returns. The 9-point regional allocation gap Australian investors cannot ignore Alongside our FY2026 domestic review, we have released the Global Equity Peer Group Review, covering 243 funds across global large-cap, global small and mid-cap, and global alternative equity strategies. Australian large cap funds returned an average 2.22% in FY2026, compared with 11.14% for their global large cap peers. That 8.92% gap meant regional allocation mattered more than manager selection within the peer groups reviewed. The review examines how gold, resources and momentum exposure shaped the year's rankings, why some strategies converted those tailwinds into stronger risk-adjusted outcomes, and where currency hedging materially changed investor returns. Across eight matched strategy pairs, AUD-hedged classes outperformed their unhedged equivalents by 7.3% to 9.3%. Rather than focusing only on the funds at the top of the one-year tables, the report explains why performance diverged and what investors should consider across returns, volatility, currency exposure and drawdowns. News | Insights Manager Insights | FarmCap 10k Words | Equitable Investors Market Commentary | Glenmore Asset Management June 2026 Performance News Bennelong Long Short Equity Fund Bennelong Twenty20 Australian Equities Fund |
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24 Jul 2026 - Hedge Clippings |24 July 2026
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Hedge Clippings | 17 July 2026 Two data releases, and one disruptive dog dominated Hedge Clippings' attention this week; Victoria's unemployment cracked 5%, and economists laid out their forecasts ahead of next week's CPI. Finally, our FY2026 Fund Manager Review lands with a lesson worth reading before you look at a single year's return. National jobs beat forecasts, but Victoria's unemployment rate just hit 5.1%, its worst since 2021
This week's ABS's June labour force data beat expectations comfortably. Employment rose 76,000 against a forecast of 15,000, split between 47,000 part-time and 29,300 full-time jobs. National unemployment held at 4.4%, in line with consensus, though participation rose 0.3 points to 67.0% and underemployment ticked up to 6.5%. The state breakdown told a less comfortable story. Victoria, the state long considered an economic basket case under ex-Premier "Chairman" Dan Andrews, continued its decline with unemployment jumping to 5.1%, the highest of any state, and the worst reading in Victoria since October 2021. MacroBusiness's Leith van Onselen has flagged Victoria's structural weakness for months: the lowest private business investment per capita of any mainland state, the highest state debt, and a manufacturing sector in long term decline. A national beat masking a genuine two speed labour market. Victoria's weakness looks structural, not seasonal, and it is worth watching whether other states start following the same investment starved path. Next week's CPI is the RBA's real decision maker: here's what the market expects
Next Wednesday's June CPI release is shaping up as the more decisive input than this week's employment data for the RBA's 11th of August meeting and rate decision. The RBA's own May forecast expects headline inflation to peak around 4.8% in the June quarter before easing, with trimmed mean staying above 3% until mid-2027. Bank previews ahead of May's data had trimmed mean clustered at 3.5 to 3.6% annually, and the actual number landed at 3.6%, the highest since September 2024. For the June quarter, banks are pencilling in quarterly trimmed mean around 1.0 to 1.1%, keeping the annual rate uncomfortably sticky. The wildcard is the fuel excise relief, which only partly expired on the 30th June and is due to end on August the 2nd just as the price of crude oil tops US$100 again. If the levy relief lapses, headline CPI could reaccelerate even if trimmed mean, the RBA's real focus, tells a different story. The RBA watches trimmed mean, not headline inflation. A rising underlying rate alongside a resolved excise question would put a further hike back on the table for August, whatever the jobs data says. Reading a fund's one year return? Read this first Our FY2026 Fund Manager Review , covering 18 peer groups and 988 funds with complete year returns, carries a lesson worth applying to any one-year performance table you look at. The year's ten strongest results all shared one thing: concentrated exposure to a single theme that dominated for three quarters, despite reversing sharply in the final one. Several of the year's best performers now sit 30% or more below their own high water marks, meaning last year's league table already describes a story that has moved on. The 2026 Review also looks at consistency across 1, 3, 5 and 7 year horizons, and finds two very different stories of it. One comes from genuine, repeatable skill. The other comes from structural leverage, gearing or concentration that mechanically amplifies whatever the market is doing, in good years and bad. Both are real and can produce a first place ranking. Only one gives an indication about what might happen next. The report also flags that eye catching risk-adjusted ratios in some unlisted credit sectors reflect valuation smoothing rather than an absence of risk. The dog that out-traded the news cycle
Barnaby Joyce paused a live ABC interview this week to shout "Sit down!" to his dog Stella, and the news clip instantly out-traded the day's actual policy news. Markets take months to price in forward guidance. Stella got the message in one shout.
News | Insights Annual Fund Manager Performance Review, FY2026 | FundMonitors.com Quarterly State of Trend report - Q2 2026 | East Coast Capital Management Trip Insights: Europe | 4D Infrastructure June 2026 Performance News Bennelong Emerging Companies Fund Insync Global Quality Equity Fund DAFM Digital Income Fund (Digital Income Class) Quay Global Real Estate Fund (Unhedged) Active ETF (ASX:QGRU) |
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17 Jul 2026 - Hedge Clippings |17 July 2026
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Hedge Clippings | 17 July 2026
Two housing stories moved in opposite directions this week: buyers are paying less, and renters are paying record amounts. Bond markets are betting the RBA is done hiking even as the RBA's own language says otherwise, and in the US, a soft June CPI figure met a new Fed chair unwilling to claim victory. At the end of this issue: a first look at our FY2026 Fund Manager Review, due for release on Monday. Rents hit record highs, Sydney posts its strongest quarterly jump in four years: Domain's June Quarter Rent Report, released 9 July, showed combined capital city house rents up 2.9% for the quarter and 7.7% year on year to a national median of $700, the fastest annual pace in almost two years. Sydney recorded the sharpest move, rising from $800 to $850, a 6.3% jump that Domain's Nicola Powell called the strongest in four years. Brisbane hit a record $700. Unit rents grew just $5 for the quarter, widening the gap with houses. Regional rents held flat despite 5.3% annual growth, so this is a capital city story. Australian Finance Group's James Redman flagged the underlying risk: Negative gearing changes already apply to established property bought after 12 May 2026, even though the law does not commence until 1 July 2027. With vacancy rates near record lows, any further pullback in investor purchases of established stock, exactly what the reform intends, could squeeze rental supply further. Coupled with the ongoing effects of 3 rate rises, the government's policies aimed at cooling investor demand for established property to help first home buyers can also shrink the rental pool in the short run, since today's rental is often tomorrow's first home. Watch new build approvals and rental yields closely. Yield compression is the release valve here, not a supply fix. Bond yields fall as markets bet the hiking cycle is over: Australian government bond yields fell across the curve this week. The three year Commonwealth bond yield dropped 11 basis points to 4.36%, and the 10 year yield fell the same amount to 4.72%, per Fixed Income News Australia. Ten year inflation linked yields eased 10 basis points to 2.28%, suggesting bond investors see the RBA's tightening cycle as largely done, even though the RBA's own minutes, released the week before, kept the door open to further hikes. Against that backdrop, RBA Assistant Governor Sarah Hunter delivered a research paper on 9 July examining how central banks assess supply shocks, timely given recent oil volatility. Her remarks sit alongside the Productivity Commission's Chair Danielle Wood's view that weak business investment and slow technology adoption have capped productivity growth since the GFC, meaning less capital per worker and a lower speed limit for non-inflationary growth, an argument for caution given the inflation fight has been far from won at this point. The market and the RBA are reading the same data differently - again. Falling yields say cuts are coming, the RBA's language says hikes remain possible. Watch the 29 July CPI release as the real tie breaker, with the next RBA decision due 11 August. US inflation cools sharply to 3.5%, but Fed Chair Warsh refuses to declare victory: The US June CPI report released this week showed headline inflation falling 0.4% for the month, the largest drop since April 2020, pulling the annual rate to 3.5% from May's 4.2% and below the 3.8% consensus. The move was driven by energy, down 5.7% for the month on the US-Iran de-escalation, though the energy index remains up 15.7% year on year. Core CPI was flat for the month and eased to 2.6% year on year, also softer than expected. Fed Chair Kevin Warsh pushed back on a premature victory lap, saying mission accomplished is not his view. Markets still raised expectations for a second half rate cut, and equities rallied. One month of energy driven disinflation right after a de-escalation of hostilities is not a durable trend, especially with the Iran situation currently is in danger of reversing. A single soft number does not make a cutting cycle, particularly with the supply side inflation that is backed up in the pipeline. FY2026 Fund Manager Review - one theme decided FY2026, then started giving the gains back: Fund Monitors' Annual Fund Manager Review, covering 18 peer groups and over 1,000 funds' returns to 30 June 2026, reveals a year that rewarded one theme almost completely: Every one of the ten strongest FY2026 results carries concentrated gold, resources, or high conviction long short exposure. The June quarter retraced much of that leadership, so the league tables already reflect a turning theme. Geographically, Australian large cap funds returned an average of 2.22% against an average of 11.14% for global large caps, a gap of 9% that made regional allocation the year's most consequential decision. The variance was hardly surprising given the ASX200 Total Return was 2.77% in the 12 months to June, compared with the S&P500's Total Return of 22.33%. The full review covering the 10 top performing funds in each Peer Group, along with commentary and analysis, will be available online at www.fundmonitors.com from midday next Monday. If you would like a copy emailed to you directly, please email your request to contact@fundmonitors.com. News | Insights Why a softer June CPI may not mean the RBA is finished | Seed Funds Management Infrastructure in focus: A hard-wearing HALO in infrastructure | Magellan Investment Partners June 2026 Performance News Insync Global Capital Aware Fund |
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