NEWS
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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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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10 Jul 2026 - Hedge Clippings |10 July 2026
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Hedge Clippings | 10 July 2026 Summary: Housing takes centre stage this week, with fresh ABS approvals data and a rapidly falling price picture landing days apart. Indian Prime Minister Narendra Modi's Melbourne visit delivered a uranium deal which has been stalled for a decade, while offshore the quick military fixes promised in both Iran and Ukraine keep dragging on. National values post their steepest monthly fall since 2022, and HSBC says an 8% correction is just the beginning Source: Cotality Home Value Index, via Mortgage Professional Australia, 7 July 2026 Cotality's Home Value Index fell 0.4% nationally in June, the steepest monthly decline since December 2022, with capital city values down 1.3% over the quarter. Sydney (-1.2% for the month, -3.2% for the quarter) and Melbourne (-1.0%, -2.6%) are leading the fall. Sydney's top quartile ($1.8M plus) has shed roughly $90,000 or 5% in three months, and auction clearance rates have sat below 50% for five consecutive weeks. Domain separately forecasts Sydney down 7% and Melbourne down 8% to June 2027, while Perth, Adelaide and Brisbane keep growing. No doubt there will be further differences on a more granular geographic and suburb basis. Hedge Clippings' own anecdotal evidence from a real estate agent contact operating in Sydney's Elizabeth Bay suggesting achieved prices are already running about 15% below three months ago, with properties taking noticeably longer to sell. HSBC's Paul Bloxham called the tax reform and the RBA's three 2026 hikes a combination that has "rapidly sapped investor demand," pointing to a peak to trough correction of up to 8%. The issue is that property, as most Australian's largest asset impact consumer confidence and the rest of the economy. CBA now expects GDP growth to slow to 1.5% by year end. Economist Belinda Allen notes the oil shock hit was milder than feared, but a deterioration in the housing market is offsetting that relief. Source: ABS Building Approvals, released 3 July 2026. Total approvals: 17,019 (+5.5% YoY) Total dwellings approved fell 1.1% in May to 17,019, per ABS data released 3 July, but the composition tells the real story. ABS head of construction statistics Daniel Rossi attributed the fall entirely to a 10.4% drop in private dwellings excluding houses, which had jumped 4.0% in April. May's Budget's tax changes will not have not fed through to this data yet, since the CGT and negative gearing reforms only bite from mid-2027 and the SMSF LRBA ban from August. This is still largely a rate and confidence story, not a tax reform one. The stakes are asymmetric across tenure types. Nationally 66% of households own their home (35% with a mortgage, 31% outright) and 31% rent, per ABS and AIHW data. In Greater Sydney ownership drops to 59% (32% mortgaged, 27% outright) and renting rises to 35%. For the roughly one third of households still paying off a loan, this cycle delivers a rare double hit: elevated repayments and declining home equity at the same time, a combination that weighs directly on consumer confidence since housing remains most Australians' largest asset. Falling prices help Albo's aspirational first home buyers get a foot on the ladder, but they do not help the roughly 4 million households already on it who are watching equity erode while repayments stay elevated. That asymmetry is the real political and economic tension of this cycle, and no single data release resolves it. A decade long stalemate ends: Australia will sell uranium to India Indian Prime Minister Narendra Modi's third visit to Australia, his first stop after Indonesia on a three-nation tour, produced a nuclear cooperation agreement allowing Australian uranium exports to India for "exclusively peaceful purposes," ending a stalemate that persisted despite a 2014 cooperation pact. Albanese framed it as diversifying Australian trade beyond China, still the nation's top partner. Modi linked it to India's target of 100 gigawatts of nuclear capacity by 2047. The two leaders also agreed to deepen defence, critical minerals and space cooperation, including a tracking terminal on the Cocos Keeling Islands, and Modi pushed for an early conclusion to the proposed Comprehensive Economic Cooperation Agreement. This is a genuine long term positive for the Australian uranium and critical minerals sector, even though the commercial ramp up will take years, not months. However, let's not go into the logic of Australia, with 28% of the world's known uranium resources being happy to export it, but not prepared to use it domestically as a reliable long term power source, unless of course it is on a submarine. Two quick fixes that still are not fixed Trump's promised swift resolution in Iran, lunched on 28th of February, has stretched to four and a half months with no final treaty signed despite June's interim memorandum - but in fact with an renewed increase in hostilities. The parallel in Putin's Ukraine short term military exercise launched in 2022 with expectations of a rapid outcome, has instead run more than four years, with Russian forces now facing genuine attrition pressure. For markets, both situations underscore the same lesson: geopolitical resolutions tend to be announced faster than they are actually delivered, and oil and risk asset pricing should build in that lag rather than front run the headline. Next week: Australia's economic calendar delivers the data that will shape the August RBA call The RBA's next meeting is not until August 10-11 and is shaping as being critical for Australia's mortgage holders, as well as the RBA's own reputation. Prior to that the board will have the benefit of June's CPI number (due 29th July). With household equity under pressure from falling prices and mortgage holders squeezed on both sides, the case for diversified exposure beyond direct residential property remains strong. FundMonitors.com tracks 1,075 managed in Australia, helping advisers and HNW investors identify genuine alternatives as capital looks beyond the family home. News | Insights 4 ASX stocks we like despite the macro uncertainty | Glenmore Asset Management Netflix: Navigating deals, AI and growth | Magellan Investment Partners June 2026 Performance News Bennelong Australian Equities Fund |
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3 Jul 2026 - Hedge Clippings | 03 July 2026
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Hedge Clippings | 03 July 2026
Let's look at the RBA Minutes first: The RBA's minutes from its 15-16 June meeting, released this week, confirmed the board held at 4.35% but kept the door open to further tightening, citing "excess demand and widespread inflationary pressures". Persistently weak productivity was flagged as a standing concern; unit labour costs remain above their inflation-targeting-period average despite wages growth in line with expectations, since output per hour isn't keeping pace. The board also linked flat equity prices partly to limited local AI-boom participation. CBA, ANZ and NAB all read the tone as hawkish but were split on the implications: CBA sees a hold through 2026, but with upside risk; ANZ is flagging an August rise if Q2 CPI surprises on the high side; and NAB reads it as confirmation the cash rate has peaked. Which one is on the money will depend on the June CPI due on 29th July, and PPI due 2 days later. But with the RBA not due to meet until 10-11 August, two weeks before the July CPI due on August 26th, there's going to be some crystal ball gazing around the board table. Complicating things will be the slide in the oil price thanks to the US-Iran de-escalation (assuming it holds), but offset by the reintroduction of the other half of the fuel excise levy, and lingering supply-side inflation still filtering through the system. Back to the ASX FY25-26 Close While the Australian equity market as a whole was lacklustre at best, particularly when judged against the S&P500 or Dow Jones, there was an extreme divergence between the sectors and companies that drove average returns, and those that dragged them down. A 48% materials rally carrying an entire index to a mid-single-digit total return (inclusive of dividends) says as much about concentration risk as it does about the benefit of diversification. Strip out rare earths and iron ore, and FY25-26 looks considerably flatter, and argues loudest for active management and offshore diversification vs. passive index investing. Source: IG Australia, ASX 200 FY close report The ASX 200 closed the financial year up 6.3% including dividends. Materials led at +48.2% on a rare earths and lithium re-rating, but even within the sector there were standouts: Mineral Resources (+186.9%), Lynas Rare Earths (+115.2%), Iluka Resources (+93.1%), plus Rio Tinto (+63.0%) and BHP (+62.4%) all leading the charge. While accepting averages can be misleading, stock selection, manager and fund selection, are vital to beating the index. While individual stock prices are known, fund performance for June 2026 is still pending. However in the 12 months to the end of May, just over 50% of equity funds on AFM's database outperformed the ASX200. Choice of the right sector, and fund, or funds, is obviously key. The top 10 over the past 12 months to May have returned between 75% and 126%, a list not unsurprisingly dominated by Resource Strategies such as Terra Capital, Argonaut and Paragon. By comparison, investing in a passive ASX200 Index strategy would force the investor to accept the good, the bad, and everything in between for a return of just under 7%. Finally, US Non-Farm Payrolls June's US jobs report delivered the softest headline in four months: payrolls up just 57,000 versus 115,000 expected, with April and May revised down a combined 74,000. Leisure and hospitality shed 61,000 roles on weak seasonal hiring. Notably, the month Goldman Sachs had modelled a 40,000 World Cup hiring boost that didn't materialise. Unemployment fell to a 12-month low of 4.2%, driven by a 720,000 plunge in the labour force rather than stronger hiring, pulling participation to 61.5%, its lowest since March 2021. Fed Chair Warsh's 17 June comment that labour data was "moving in a good direction" now reads as cover for an extended hold, with June CPI (14 July) the next catalyst. A falling unemployment rate built on a shrinking labour force is a weaker signal than the headline suggests. It buys Warsh time but doesn't resolve the tension between inflation and a cooling jobs market, worth watching alongside the RBA's own next move. Donald will want to focus on the US birthday celebrations this weekend, rather than the job numbers. News | Insights 10k Words | Equitable Investors Netflix: Navigating deals, AI and growth | Magellan Investment Partners May 2026 Performance News Bennelong Emerging Companies Fund |
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26 Jun 2026 - Hedge Clippings |26 June 2026
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Hedge Clippings | 26 June 2026 Central banks are trying to sound calm. Markets are trying to sound confident. Neither looks entirely convincing. RBA | Waiting is not relief The Reserve Bank left the cash rate unchanged at 4.35%, but nobody should have confused that with comfort. After a year of policy reversals, first down, and then back up, the Board is now in the only other position available: waiting. That is not the same as relief. More a case of being stuck between a rock and a hard place. The latest inflation data gave both sides of the argument (and politics) something to cling to. Annualised headline CPI fell to 4.0% in May, helped by fuel-price effects, which was quickly treated in some corners as evidence that pressure is easing. The more important number, however, was the trimmed mean, which rose to 3.6% and reached its highest level since September 2024. That is the measure the RBA watches most closely, and as the chart above shows, it is not moving in the right direction. The difficulty the RBA has at this point in the cycle - apart from inflation remaining above their 2-3% trimmed mean target - is that they can see more volatility to pricing ahead. In July the fuel excise respite is due to halve, and at some stage will be removed altogether. While hostilities in the Middle East have abated (for now) it is going to take some time for the aftermath of the war, and its effects on supply driven inflation, to work through the system. The only certainty seems to be uncertainty. The labour market adds to the ambiguity. May employment rose by 40,300, which looks solid at first glance. But 35,200 of those jobs were part-time, while total hours worked fell. Unemployment eased to 4.4% from April's 4.5%, but this is not a labour market roaring back to life. It is a labour market holding headcount while reducing hours. That matters. It gives the RBA no clean reason to cut, and no urgent reason to hike. Instead, it keeps the Board exactly where it has been: staring at the next inflation print and hoping the economy does not force its hand. However, according to Renny Ellis from Arculus Funds Management, the market is only pricing in around 8 bps of tightening over the next 12 months, which he believes is under-pricing the medium-term risk of a "higher for longer" environment, which in his view is leading to a further rate rise in Q4 this year. Ellis also sees the risk of "a credible path to a second 25bp increase in 2027" as being possible. You can read his Market Commentary via this link. Property | The policy squeeze arrives before the policy changes The housing market is already showing strain. The combined capitals' preliminary auction clearance rate fell to 47.4%, the lowest weekly reading since April 2020. That is not a market looking through rate hikes. It is a market absorbing them. Sydney and Melbourne remain the key pressure points. Affordability is stretched, borrowing capacity has been hit, and consumer confidence has not been helped by the Budget's changes to negative gearing and capital gains tax. National home values were flat in May, while Sydney values are already below their November 2025 peak. The important point is that the tax changes have not yet landed. The CGT discount reform and negative gearing restrictions are not due to apply until July 2027, while the SMSF residential LRBA ban is expected around August 2026. The current weakness is therefore a combination of rate-driven, combined with investors reacting to uncertainty and fear of the tax reforms that will bite later. If consumer confidence deteriorates further, the property market could shift from a source of household wealth comfort to a source of household anxiety very quickly. Chalmers can argue about the technicalities of the property market being in a correction or not, but the reality for homeowners with a high LVR, or selling their house into a softening market are feeling the reality pinch. The bottom line This was a week of misleading headlines and uncomfortable details. Headline inflation fell, but underlying inflation rose. Jobs grew, but mostly part-time. GDP expanded, but only because data-centre investment did the heavy lifting. Property softened before the major tax reforms have even begun to bite. For investors, the lesson is familiar. Volatility does not just reveal market direction. It reveals process. It shows which managers are relying on beta, which are managing risk, and which have a framework strong enough to survive when the story changes. That is where FundMonitors matters. Weeks like this are exactly why manager research, peer comparison and performance analysis are worth doing properly. News | Insights Is the Consensus on Equities the Riskiest Trade in the Room? | East Coast Capital Management Market Commentary | Glenmore Asset Management May 2026 Performance News Seed Funds Management Financial Income Fund DAFM Digital Income Fund (Digital Income Class) |
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19 Jun 2026 - Hedge Clippings |19 June 2026
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Hedge Clippings | 19 June 2026
News | Insights Expert Analysis of the RBA's June 16 Rate Decision Pressure at the pump | Magellan Investment Partners Federal Budget 2026-27: Winners, Losers and Opportunities for the Mining Sector | Australian Secure Capital Fund May 2026 Performance News Bennelong Long Short Equity Fund |
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12 Jun 2026 - Hedge Clippings |12 June 2026
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Hedge Clippings | 05 June 2026
News | Insights Shock absorption: managing the impact of the Middle East conflict on listed infrastructure | Magellan Investment Partners Property Update | Australian Secure Capital Fund May 2026 Performance News Quay Global Real Estate Fund (Unhedged) |
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5 Jun 2026 - Hedge Clippings |05 June 2026
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Hedge Clippings | 05 June 2026
The ABS released the March quarter 2026 National Accounts on Wednesday, and the result was a notable slowdown. Australian GDP expanded by just 0.3% on a quarterly basis in Q1 2026, against the 0.8% rise in the prior quarter, with the country's GDP growing just 2.5% year-on-year, both figures missing expectations. The internals told a revealing story: the biggest impact in the quarter was investment in data centres. Westpac estimates that this investment, including spillover effects, drove all the growth this quarter and around 0.8 percentage points of GDP growth in year-ended terms. In other words, strip out the data boom, and the underlying economy effectively flatlined. ICT investment surged from around $2 to $8 billion per quarter as a result of datacentres, accounting for an estimated 85% of growth capital expenditure over the last year, and almost all in Q1 2026. This reveals that the uplift in investment is almost wholly reliant on the data boom, with negligible investment growth in other industries. The economy was clearly slowing even before the Middle East conflict, and we've yet to know how long Trump's short military excursion, now into its third month, is going to last. Adding to the problem is that three interest rate hikes are starting to impact the housing market, which is now subject to further negativity thanks to being side swiped by the changes to negative gearing and CGT contained in the budget. The implication for the RBA's next move is interesting to say the least. Going into their June meeting, the economy is weaker than the RBA had assumed just a month ago, and Q2 could be worse. The Middle East conflict's full impact flows through from April onwards. Adding to this is the April jobs data, showing unemployment rising to 4.5% for April. The bottom line is that the economy is in a genuine squeeze, whether Chalmers or Albanese want to admit it or not. Inflation remains well above target and fuel-driven second-round effects are still working through, but growth is slowing, the labour market is softening, and the trade account has only partially recovered. The RBA faces a classic stagflationary dilemma, albeit a mild one at this stage. Meanwhile, the potential for an acceleration in the decline in property prices further damaging consumer confidence could tip the balance, and the economy, over. Whether the RBA will about-turn again, stay on hold, or, as Westpac are predicting, increase to 4.6% will remain to be seen, but with the next meeting just 10 days away, we won't have to wait too long. News | Insights
May 2026 Performance News |
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29 May 2026 - Hedge Clippings |29 May 2026
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Hedge Clippings | 29 May 2026
News | Insights
AI needs more than chips: Why power and grid buildout matter | Magellan Investment Partners 10k Words | Equitable Investors April 2026 Performance News Equitable Investors Dragonfly Fund |
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22 May 2026 - Hedge Clippings |22 May 2026
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Hedge Clippings | 22 May 2026 The 2026 Budget may come to be remembered less for its promised "fairness" than for the investment shock it has unleashed. Labor's changes to negative gearing and capital gains tax are being sold as a rebalance in favour of younger Australians. The political risk for Albanese and Chalmers is that they want to make it look like a targeted hit on the very wealthy, and older, asset rich, boomers. In reality, it is a broader attack on investment, property ownership and household balance sheets across a much wider demographic. For the property market, the early signs are not encouraging. Macquarie has reportedly stopped factoring negative gearing into some serviceability calculations, and Westpac has told brokers that some investor's loan pre-approvals will need reassessment. Once banks begin changing lending assumptions, policy theory quickly becomes market reality. The danger is not simply that investor demand weakens. It is that prices fall into an already fragile housing market. Morgan Stanley has reportedly warned of a 5-10% national house-price correction, with some analysts pointing to sharper risks in Sydney and Melbourne. That may sound like good news for first-home buyers. But falling prices are not costless. Recent buyers with high loan-to-value ratios are most exposed. The RBA has previously warned that negative equity makes borrowers and lenders more vulnerable, because a stressed borrower may be unable to repay the loan even by selling the property. The housing market is not the share market, and home loans do not operate like margin loans. But the feedback loop can still be brutal: weaker sentiment, tighter credit, fewer buyers, forced sales, lower prices, and then even tighter credit. What makes the current environment particularly dangerous is that the pressure points are no longer confined to one part of the economy. The Budget has not only shaken confidence in residential property investment. It has also fundamentally altered the tax landscape for equities, private investment and small business. At the very moment the government should arguably be encouraging investment and risk-taking, it has instead introduced a level of policy uncertainty that is causing both investors and lenders to reassess their appetite for risk. Meanwhile, inflation is proving far more stubborn than Canberra anticipated. To be fair to the government, a large part of the latest inflation shock is external. The RBA now expects headline inflation to peak at 4.8% in mid-2026, with underlying inflation remaining above the top of its target band until at least mid-2027. Consumer sentiment has already deteriorated sharply. The latest Westpac-Melbourne Institute survey reportedly fell 12.5% in April to levels not seen since the pandemic, while NAB business confidence suffered one of its steepest monthly falls in decades. And now the labour market is beginning to crack. Australia's unemployment rate rose to 4.5% in April - the highest level since November 2021 - after employment unexpectedly fell by almost 19,000 jobs. Economists are increasingly describing the labour market as "softening", with hiring intentions weakening under the combined weight of higher borrowing costs, weaker consumer demand and growing uncertainty. The result is a deeply uncomfortable combination: slowing growth, weakening confidence, and persistent inflation. Which brings us to the question nobody in Canberra wants to answer or us to ask: How close are we to recession? The margin for error is narrowing rapidly. The RBA itself has acknowledged that each successive rate rise increases recession risk. Under its more adverse scenarios, unemployment could rise above 5% and economic growth could slow to levels consistent with recession. At a time when confidence was already fragile, Chalmers chose to target the very areas most sensitive to confidence and leverage - housing, investment and small business - which drive the economy. The government may have hoped voters would see "fairness" - odd from a government that broke explicit pre-election promises. And this is where the Budget may prove both economically damaging for all, and for the government, politically catastrophic. For the past year Albanese has appeared untouchable. Today, the parallels with Bill Shorten's franking credits debacle prior to the 2019 election are becoming harder to ignore. News | Insights Market Commentary | Glenmore Asset Management China's Luxury Reset: What we're seeing on the ground and why it matters | Insync Fund Managers April 2026 Performance News Bennelong Concentrated Australian Equities Fund |
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