The CPI data is out.

The short form summary: the rate hikes are going to continue.

Headline, quarter on quarter, trimmed, weighted, all above consensus, and slightly above prior.

The financials, as a sector, are broadly decent inflation hedges, specifically because banks can reprice through variable mortgage rates, and insurance companies, because they benefit from the higher returns to float, as well as the higher premiums, whilst having an asset-liability match that prevents changes in rates from leaving them ill-positioned.

At the DAA level, we are underweight Australian shares, maintaining a preference for international. Partly this is because higher inflation means higher rates means higher mortgages means greater risk for Australia’s highly geared residential property sector.

That’s not a trade that’s worked especially well (putting it mildly, as Australia has been one of the best performing markets thanks to commodities) but it is a position we will stick with.

Overall, the market did not like the CPI release. FX, yields up, duration equities and risk in general, down.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

Receive our investment insights

Something went wrong. Please check your entries and try again.