Global equity markets were again volatile in June, highlighted by a sharp intra-month reversal in the tech sector, the reopening of the Strait of Hormuz and the launch of the largest IPO in history - SpaceX. Despite a strong start to the month, the S&P 500 and NASDAQ finished -1.1% and -0.2% lower, respectively. Returns were weighed down by disappointing updates from some major tech companies (Broadcom, Adobe, Oracle) and a more hawkish than expected speech from Kevin Warsh, during his first meeting as the new chairman of the US Federal Reserve. International markets outperformed their US peers, with the Euro Stoxx 50 and FTSE 100 rising +4.6% and +0.8% during the month, respectively.

As noted earlier, the debut of SpaceX garnered much attention. The company raised US$75b, almost 3x larger than the prior record held by Saudi Aramco and made Elon Musk the world's first trillionaire. After rocketing higher during its first few days, SpaceX finished the month +27% higher.

Domestic markets also outperformed the US, with the ASX All Ords Acc Index rising +0.4%. Sector returns were sharply divergent. Energy was the largest underperformer, declining - 9.0%, as the crude oil price fell ~20% following the Iran ceasefire deal. On the flip side, Consumer Staples (+12.3%), Consumer Discretionary (+12.1%), and Real Estate (+1.8%) outperformed, with the RBA's decision to hold rates providing some support to rate-sensitive sectors. Small caps underperformed vs large caps, with the ASX Small Ords Acc index falling -2.0%.

In bond markets, the US 10-year bond yield rose +3 basis points (bp) to 4.47%, whilst its Australian counterpart fell - 11bp to 4.72%. The Australian dollar fell during the month to US$0.69, implying a decrease of 0.3 cents, pressured by softer commodity prices and a firmer US dollar.

Barcelona offered an unusually dramatic setting for this year's Global ABS conference, with evening fireworks to celebrate the visit of Pope Leo XIV for the inauguration of the Sagrada Família's newest tower. But inside the conference halls and evening receptions of the 30th Annual Global ABS Conference, the tone was rather steadier.

Market Participants were constructive on demand and market technicals, while increasingly conscious of the disconnect between resilient financial markets and the wider macro backdrop. Unlike the SFVegas conference earlier this year, which was dominated by the AI Disruption theme, it did not feel that there was an overriding consistent theme for the conference, rather a repeated story of strong demand for securitised products, continuing to shrug off market volatility.
The impact of MFS was a broad talking point, although there seemed no waning of private market appetite either. ABS Issuers, both existing and new, are buoyant on the demand for securitised credit moving into a higher rate environment and the resilience that has been shown by the market through various volatile periods, over the past 12-18 months.

ABS: strong demand, but tighter spreads driving more selectivity
The tone in ABS markets remained broadly constructive, supported by strong technicals shown via strong primary execution, and confidence in overall structural robustness. Most investors continue to believe ABS/RMBS can absorb a moderate weakening in consumer performance, and broad concerns around fundamentals remained limited. That said, tighter spreads were a key focus against a backdrop of emerging structural changes in new issues, or pockets of collateral deterioration in Europe.

On relative value, ABS continues to be seen as attractive versus covered bonds and IG corporates, with senior EUR tranches and BBB/BB mezzanine tranches highlighted. The broad expectation was that heavier primary supply could pressure senior spreads modestly, while mezzanine paper should remain better supported for the rest of 2026.

Issuer base continues to broaden across collateral types
The Challenger Global ABS team conducted a large number of Issuer meeting across a mix of established platforms, newer issuers and first time issuer prospects. Issuers are generally focused on maintaining a capital lite framework trying to optimise funding as much as possible with the private mezzanine and/or forward flow partners.

A positive theme was the continued expansion of the issuer base, with several lenders with established lending histories but historically private funding models now looking to access public ABS markets. Stable to tightening markets over the last 12-18 months, combined with strong investor demand, are encouraging issuers to diversify funding through public securitisation. Examples include consumer and auto lending platforms as well as asset finance lenders across the UK and Europe. This broadening of issuers and asset classes was generally viewed as supportive for market depth, even if it points to a stronger pipeline and some near-term spread sensitivity.

Australian Issuers well represented
Australian Issuers were also well represented in Barcelona, with continued interest from investors in the Australian ABS market and a sense that the sector remains firmly on buyers' radar. Trading/sales conversations gave a continued wider perception of improving secondary trading activity and liquidity, reinforcing the view that Australian collateral continues to offer useful diversification within broader ABS allocations. 

See you next year!
The thirtieth birthday for the Global ABS conference closed with yet another record year of over 6000 registered attendees. Over the last 3 decades this conference has taken place, there have been a number held in slightly less lovely locations than Barcelona. We note the new joiners to our asset class had no comprehension of the years it was held in Edgware Road, for example, and there were visible shudders! The commitment to this asset class from the many veteran and newer market participants who have attended Global ABS in Barcelona, London, Cannes, Brussels and back to Barcelona, has shone through various market crises and brings us to the brink of positive changes in regulation and a larger issuer and investor base into 2027.