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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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