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Hedge Clippings | 23 August 2024 Firstly, let's start with an apology: Last week's "Hedge Clippings" incorrectly stated that the July CPI numbers would be released on Wednesday this week, whereas they actually aren't due until Wednesday next week. As not much has changed in our view since last Friday, we could simply "rinse and repeat" and see if anyone noticed, but that would be lazy to say the least. For the record however, and for those who missed last week's edition, expectations are that inflation will remain stubbornly in the 4% region (July 3.8%, or 4% excluding fuel, fruit and veg, and holiday travel, or 4.1% trimmed mean) and if so, the RBA are unlikely to change their current monetary policy settings. If anything, the risk is that any deterioration in the CPI numbers, and they'll make good on their threat to raise rates, rather than keep them steady. What was noticeable in Tuesday's release of the RBA's minutes of their August meeting was an argument for increasing rates, or holding them steady, but nothing about the case for easing. That option still seems to be off the table for at least the next few months. However, that didn't stop three of the big four (and a host of smaller lenders in response) from dropping their term deposit rates this week, with cuts as large as 0.8% in some cases, as discussed earlier today on FNN with Nick Chaplin from Seed Funds Management. While disappointing for the banks' depositor clients, it accentuated the attractiveness of other fixed income and credit options in the managed fund sector, where returns (although not bank guaranteed) of 8-10% are readily available. Meanwhile in the USA, where a September rate cut seems all but assured, and with the main question being the choice between 0.25 and 0.50%, and then how many moves will follow before Christmas. Fed Chair Jerome Powell is due to speak at a symposium of central bankers in Jackson Hole, Wyoming on Friday, US time, which will hopefully clarify his thinking. Over in the US the concern is more focused on the potential for economic weakness, or worse. Elsewhere the political focus in the US has all been on the Democratic National Convention and the nomination of Kamala Harris to lead the Democrats to what seemed an unlikely presidential victory just a month or so ago. Harold Wilson (British PM 1964-1970, and again 1974-1976) once said a week is a long time in politics. To date we've seen an attempted assassination, and a change in candidate, so with 74 days to go to the US election, anything can happen and we won't make a prediction - other than it will come down to voter turnout on the day in the six so called "swing" states. News & Insights Manager Insights | Seed Funds Management What's Social Proofing? | Insync Fund Managers Stock Story: National Grid | Magellan Asset Management July 2024 Performance News Skerryvore Global Emerging Markets All-Cap Equity Fund Argonaut Natural Resources Fund Bennelong Australian Equities Fund Glenmore Australian Equities Fund Bennelong Concentrated Australian Equities Fund |
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