Arculus Funds Management is an Australian asset manager of both public and private mandates. They manage two retail public unit funds for DDH Graham:
Investing is very difficult around key pivot points. If it were easy everyone would be getting double returns consistently. After a short lull in the economy over the past 6 months, we expect that some time in the March quarter we will begin to see inflation, or at least the factors that will lead to
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During November the market consensus shifted towards the FOMC and ECB remaining on hold throughout 2024. This reflects a forecast that inflation will continue to deflate while unemployment remains low, and the economy keeps growing but at a slow pace. This is the “Goldilocks” scenario. The alternative view is that inflation will begin to rise
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Last week was a big one for the history of Japanese monetary policy. If you did not notice this, you are forgiven. Getting any news on Japan – one of our largest trading partners – in Australia is apparently beyond the average attention span of any Australian journalist, so if you are expecting something about
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We were surprised last week by the reaction to the slightly better than expected US CPI monthly report. In aggregate the headline month-on-month CPI rate was flat versus a 0.1% forecast and core inflation was 0.2% versus 0.3% expected. A great deal of care needs to be taken when interpreting monthly data because inflation readings
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The week ahead may prove pivotal for the global bond markets. The US has roughly $33 trillion in Federal debt, at an average interest rate of roughly 3%, which generates around $1 trillion per year of interest cost. Based on current expectations, the Congressional Budget Office guesses that the government deficit from 2024 through 2033
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Interest Rates The markets were caught by a triple surprise last week. Firstly, the Treasury opted to issue less 10 and 30-year bonds and more 3-5 year bonds for its refinancing, then the ISM manufacturing and services PMI data was weaker, and finally the non-farm payrolls were weaker than expected. This brought about what looks
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In Australia the release of the monthly CPI data upset the bond market that had been hypnotised by the relentless beat of the banks, media, and government messaging that inflation would keep declining. Although no one expects inflation to decline, or rise for the matter, in a linear manner, many in the market did the
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The markets, at both a bond and currency level, are now forecasting that the RBA has fallen behind the curve with its interest rate moves. The RBA is now expected to increase rates by 25bps at the November meeting and then remain on hold until the February meeting, when a new RBA interest setting board
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Some have described last week’s US bond sell off as a “bondcano”. We would prefer to be little less dramatic given that this is something we have forecast for some months now.
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The common theme of market strategists over the past 6 months – basically since the Credit Suisse and Silicon Valley Bank events in March – is that the global economy will face a credit crunch that causes a recession. Even though this has been subsequently and self-evidently shown to be an incorrect forecast, the same
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Another rough week for the now very stale bond bulls that show a startling level of misunderstanding of inflation. The reality is something we have written about many, many times since our first early warning in June 2020
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The past week was all about the Federal Reserve’s Jackson Hole symposium. The market waited patiently for a revelation from the symposium only to be told once again that inflation remains too high, that rates will likely have to remain at an elevated level longer and finally that rates may have to keep rising. Well,
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