Aus macro/job ads/PMI’s

All of the Aussie labour market data is cooling, at a decent clip, based on job ads (today’s ANZ-indeed print). Overshooting to the downside is very possible. And yet, inflation (appears to be) is stubborn, and employment in absolute terms is okay.

Complex, to say the least.

The cracks certainly seem to be showing, e.g. below PMI print, and the consensus that policy is indeed tight seems (broadly) substantiated by the employment indicators above, and the opinions of those pulling the monetary strings. They don’t think it loose, for example.

The new financial year hasn’t started with a bang for bonds (as in, not starting great) and yet as I look at the above, combined with my belief that Australia, as a highly indebted country, with mortgage rates that have trebled off lows in a short period of time, is vulnerable to a downturn, continue to suggest bonds as a good and useful source of portfolio ballast.

We’ve got a mix of cash, credit, and treasuries, within our defensive buckets, and whilst the yield pick up to cash isn’t great from intermediate bonds, the benefit from an asset that will surely do well in a growth scare is, we think, meaningful.

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