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Hedge Clippings | 21 August 2026 Unemployment back to April's post-COVID high, real wages going backwards on both sides of the Pacific, and a US Treasury bond buyback that was unwound within a day of being announced, while the war it was reacting to kept getting worse, not better. Unemployment hits 4.5% again, the highest of the post-COVID era Thursday's Labour Force release showed seasonally adjusted unemployment rising to 4.5% in July, up from 4.4% in both May and June, and back to May's number, the highest reading of the post-COVID era in trend terms. Employment fell by 15,800 mainly driven by a fall of 32,200 part-time jobs, and total hours worked fell by 1 million, although still 21 million hours higher than a year ago. Participation eased to 66.9% from 67.0%. This is the labour market evidence, alongside the July CPI data due next Wednesday, that will be on the agenda when the RBA next meets on 29 September. Despite the softer July employment number, the RBA reportedly still views the labour market as a little tight even though it has been steadily rising since the post COVID low of 3.4% in July 2022. Economists now rate a September rate hike as extremely unlikely rather than impossible, while the chances of a rate cut - not even contemplated by the board at the RBA's last meeting - would also seem unlikely unless July's CPI surprises on the downside, or consumer sentiment falls further thanks to the budget's tax changes. Anecdotal evidence suggests that the unemployment rate will continue to rise, particularly given the decline in the property market and the resultant sharp fall in mortgage processing by the big banks, and which are already flowing through to those employed in related fields such as conveyancing. While some are pointing to three consecutive rate rises from the RBA as the cause, only "Melons" Albanese and Jim Chalmers are denying that the budget changes are partly responsible. A fourth straight month of underemployment above 6%, with full-time growth offset by a bigger fall in part-time hours, isn't a labour market falling off a cliff. The housing market losing momentum will also add to the areas the RBA will be watching closely. US$40 trillion in debt, 30 year yields at 19 year high, and a bond buyback that didn't survive the day Total US public debt outstanding topped US$40 trillion for the first time on 19 August, the same day the 30-year Treasury yield hit its highest level since 2007 amid the renewed Middle East escalation and a deteriorating fiscal outlook. The US Treasury responded with a surprise announcement doubling its long-dated bond buyback size from US$2 billion to at least US$4 billion per operation, effective 9 September through 4 November, its second intervention this month. Yields fell sharply on the announcement, the 30 year down 9 basis points to 5.196%, but the relief didn't last: by Thursday the 30 yield had risen over 7 basis points to as much as 5.27%, erasing the prior day's move entirely. Treasury Secretary Scott Bessent called it a "big tool kit," and Trump, asked if Americans should worry about the bond market, said simply, "No, I don't think so." A buyback fully unwound within 24 hours is a useful data point on its own: it tells you the market's real concern isn't liquidity, it's the underlying fiscal trajectory, which no buyback programme actually fixes. Term premium, not plumbing, is doing the work here. Day 173: the war that was meant to last weeks now has the UAE watching for ballistic missiles, while Trump threatens US ally Oman. The US-Israel war on Iran, now in its sixth month, escalated rather than resolved this week. The UAE reported detecting two ballistic missiles launched toward the country from Iran, Israel struck an airbase in Syria's Idlib province, drawing condemnation from both the US and Turkey, and Trump posted an image of the Strait of Hormuz labelled "New US territory" after Iran restated its core demands for reopening it. Trump separately said no talks were underway, a day after suggesting a back channel had opened with Iran's Revolutionary Guard Corps. Oil climbed to its highest level since July as hopes of a near-term resolution faded again, the fourth such reversal since February. Every prior "close to a deal" moment in this conflict has been followed by escalation within days. Markets pricing imminent resolution are trading the headline, not the pattern. The pattern, five months running, is escalation, with Trump seemingly running out of options - and time - prior to the mid-term elections. News | Insights Manager Insights | Sharpbridge Funds Management Great technology, poor return | Insync Fund Managers Market Commentary | Glenmore Asset Management July 2026 Performance News Bennelong Long Short Equity Fund |
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