Hedge Clippings | 23 January 2026

December's stronger than expected unemployment rate of 4.1% (down from 4.3% seasonally adjusted) indicated that, in simple terms, the labour market is running hotter than the RBA would ideally like. Demand for workers remains solid, wage pressures are unlikely to fade quickly, and the risk of inflation sticking around for longer stays on the table. If only labour productivity were increasing!

For the RBA's first meeting of the new year, due on 2-3rd of February, this makes a near-term rate cut highly unlikely, although it may be a meeting too early to see rates rise. The RBA has been clear that it wants to see convincing evidence that inflation is moving sustainably back to target, and a tight labour market works against that narrative. Based on the unemployment rate, a hold is the base case scenario, with the Bank reinforcing its "higher for longer" stance rather than opening the door to easing.

Of course, that could all go out the window when December's monthly CPI figures are released next Wednesday. Expectations are for headline inflation to continue easing, helped by goods disinflation, lower freight costs and softer discretionary spending. However, the real focus will be on the underlying measures, particularly trimmed mean inflation. Consensus is that this will remain sticky, especially in services such as rents, insurance, health and education.

Whatever the outcome, an easing is unlikely given the cautionary nature of the RBA's mindset, and particularly after they probably consider they might have jumped the gun when cutting rates to 3.6% last August, following previous cuts in May, and before that in February. The August rate cut led leading economists from the big four banks and others to get overly excited, with AMP's Shane Oliver expecting the RBA to cut further last November, and again in February and May, taking the cash rate to 2.85%.

Followers of Hedge Clippings may remember that our regular market experts, Nick Chaplin from Seed Asset Management and Renny Ellis from Arculus, were not only critical of the RBA's August move but also correctly warned against those betting on a further cut in November. When we last spoke to them before Christmas, they were of the view that the RBA's next move could well be up, so we look forward to checking in with them once next week's CPI results are out.

For those who think Michele Bullock's gig as RBA Governor is difficult, with calls from economists and homeowners to drop rates, and no doubt with some quiet pressure behind the scenes from Treasury and Jim Chalmers, spare a thought for Jerome Powell. The Fed Chair is facing a criminal investigation (but no charges yet) relating to his congressional testimony about cost overruns at the Federal Reserve's headquarters. Powell claims it is because he won't bend to Trump's bidding to cut rates.

We shall watch the outcome with interest. Will the Justice Department chicken out, or continue Trump's bidding? Powell's term as Fed Chair ends on the 15th of May (assuming Donald doesn't re-appoint him), although his term as a board member runs until January 2028. Coincidentally, that is when the next President is due in the White House, assuming Trump doesn't find a way to run again.

Tempting though it may be to comment on Donald Trump's other regular and recent pronouncements and activities, there doesn't seem to be much that we could add.  If nothing else, he's a media godsend and seemingly insistent on being at the centre of the news. If not, he'll say or do something to make sure he is.

Watch this space, but importantly, have a great Australia Day holiday celebration.

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Why collaborating is key to climate change

Pendal

January 2026

5 minutes read time

WHAT does it take to tackle climate change, food security, or pandemic risk? At the recent PRI Stewardship and Collaboration Forum, the answer was clear: collective action.

The United Nations Principles for Responsible Investment (UNPRI) brought together global leaders in sustainable finance.

This Sydney forum, hosted by Regnan, convened 45 asset owners, managers, and responsible investment professionals to share insights on collaborative stewardship. Regnan's Grace Zhang presented at a similar event in Melbourne.

The power of collective action

Investors face challenges that are global and demand collective action. Issues such as climate change are beyond the control of one individual company or investor.

Investors who view their activities within the context of interconnected, dynamic systems recognise their role in building resilience across the financial ecosystem.

This systems-thinking approach has long been central to Regnan's research, engagement, and advocacy.

It is why Regnan is actively involved in industry associations and initiatives within the responsible investment industry.

Why impact investing?

Aligning investments with personal values to have a positive impact on the world while also generating a financial return.

Why collaboration matters

Collaboration gives investors access to diverse perspectives, shared intelligence and optimises resources. It also offers greater scale.

Regnan has long recognised the importance of bringing voices together to address big challenges. Since Regnan became part of the Perpetual Group, stewardship opportunities have been amplified.

This represents greater funds under management (FUM), which has increased influence. Collaboration also enables different engagements across geographies, asset classes and fund types.

We have found within the Perpetual Group that collaboration allows for diversity of thought through challenging assumptions and improving decision quality.

Regnan research highlights that to achieve true diversity is not just by having varied backgrounds, but by also cultivating a culture where differences can be valued and expressed.

Regnan also seeks to bring voices together across our industry. This has included hosting like with the PRI event earlier this month, as well as facilitating and bringing communities together.

A few years ago, Regnan brought together different links along the food production supply chain to discuss sustainable agriculture.

Last month, we walked around the Regnan eucalyptus trees we get our name from with key leaders in the biodiversity space for an exploration of the work Regnan is doing in advocating the Great Forest National Park.

Regnan is also a supporter of the other initiatives by the UNPRI, working with the SPRING initiative which relates to nature, co-leads the Collaborative Sovereign Engagement on Climate, and has a longstanding membership with the Climate Action 100+ initiative.

Challenges and realities

Positive intentions alone do not guarantee smooth collaboration. As anyone who participated in group projects at university knows, not all contributions are equal.

Internal alignment with specific funds, mandates, and client expectations are essential.

Collaboration must connect with other stewardship and engagement efforts to avoid "collaborative fatigue" - multiple meetings with nebulous outcomes that fail to advance the purpose of the funds.

Why now?

Continued ramp up in focus on climate change and ways to achieve global net zero goals through the transition to clean energy is generating greater opportunities and diversification in impact investing.

Navigating regulation

Regulatory challenges are increasingly shaping the landscape of responsible investment. In the US, political resistance has led to changes in shareholder rights, antitrust claims, and investigations into proxy advisors.

Closer to home, the ACCC has opened consultations to introduce a class exemption for certain types of beneficial collaboration.

It is vital that joint stewardship activities, such as engagement on climate, human rights, and governance, remain permissible under competition law.

Restricting such collaboration could undermine efforts to address systemic ESG risks that require collective action.

Looking forward

Collaboration does not negate competitive tension. Our clients expect us to undertake stewardship activities that provide meaningful investment insights and strengthen portfolio holdings.

Nevertheless, collaborative stewardship is essential for managing systemic risk.

Regnan has been a pioneer in using a systems-thinking approach to sustainable investing, and involvement in these collective initiatives is vital to support the health and resilience of the entire system (which, incidentally, includes our investable universe).

The stewardship work Regnan does for Regnan funds, and the support provided across the Perpetual boutiques, treats stewardship as a beneficial component to active management.

Leadership in collaboration activities allows us to leverage our research and experience, ultimately making us better stewards of the portfolios we influence.

Why Regnan Credit Impact Trust?

Provides easy access to an institutional-grade impact investment fund that is highly liquid, diversified and scalable.

Funds operated by this manager:

Pendal MicroCap Opportunities Fund , Pendal Global Select Fund - Class R , Pendal Sustainable Australian Fixed Interest Fund - Class R , Pendal Focus Australian Share Fund , Pendal Horizon Sustainable Australian Share Fund , Regnan Credit Impact Trust Fund , Pendal Sustainable Australian Share Fund , Pendal Sustainable Balanced Fund - Class R , Pendal Multi-Asset Target Return Fund

 This information has been prepared by Pendal Fund Services Limited (PFSL) ABN 13 161 249 332, AFSL No 431426 and is current as at December 8, 2021. PFSL is the responsible entity and issuer of units in the Pendal Multi-Asset Target Return Fund (Fund) ARSN: 623 987 968. A product disclosure statement (PDS) is available for the Fund and can be obtained by calling 1300 346 821 or visiting www.pendalgroup.com. The Target Market Determination (TMD) for the Fund is available at www.pendalgroup.com/ddo. You should obtain and consider the PDS and the TMD before deciding whether to acquire, continue to hold or dispose of units in the Fund. An investment in the Fund or any of the funds referred to in this web page is subject to investment risk, including possible delays in repayment of withdrawal proceeds and loss of income and principal invested. This information is for general purposes only, should not be considered as a comprehensive statement on any matter and should not be relied upon as such. It has been prepared without taking into account any recipient's personal objectives, financial situation or needs. Because of this, recipients should, before acting on this information, consider its appropriateness having regard to their individual objectives, financial situation and needs. This information is not to be regarded as a securities recommendation. The information may contain material provided by third parties, is given in good faith and has been derived from sources believed to be accurate as at its issue date. While such material is published with necessary permission, and while all reasonable care has been taken to ensure that the information is complete and correct, to the maximum extent permitted by law neither PFSL nor any company in the Pendal group accepts any responsibility or liability for the accuracy or completeness of this information. Performance figures are calculated in accordance with the Financial Services Council (FSC) standards. Performance data (post-fee) assumes reinvestment of distributions and is calculated using exit prices, net of management costs. Performance data (pre-fee) is calculated by adding back management costs to the post-fee performance. Past performance is not a reliable indicator of future performance. Any projections are predictive only and should not be relied upon when making an investment decision or recommendation. Whilst we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The actual results may differ materially from these projections. For more information, please call Customer Relations on 1300 346 821 8am to 6pm (Sydney time) or visit our website www.pendalgroup.com