The RBA is on hold, unsurprising given US banking volatility and Credit Suisse going under earlier last month. The monthly inflation data is moving in a manner consistent with an inflation peak that has now been passed.

In the accompanying statement, the RBA emphasised financial stability, citing that long and variable lags mean the prior ten hikes will continue to impact the economy, meaning now is a good time to pause and see how the data evolves.

The market, unsurprisingly, likes it; ASX is up, longer duration REITs are up, AUD is down, and 10 year yields are modestly lower post the 2.30 pm announcement.

It is, to our mind, very clear that the Australian economy will slow and slow sharply, and consequently being underweight Aussie shares in general (preferring international) makes sense. Within the asset class, owning good quality defensives (staples, telecoms, healthcare, insurance and utilities) makes further sense.

Note that the very highest quality stocks continue to trade at ludicrous levels in terms of valuation (such as COH, RMD, SEK, REA, DHG, and XRO). So we shy away from those, targeting the “next level down” to get a better balance of quality, growth, and value.

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.

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