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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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