Monday Musings: July 5, 2022

Jul 05, 2022

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Public Trust Credit Team

A note on our publication decisions

Consistent readers of the Monday Musings may wonder what drives our publication decisions, and why we remain silent on certain topics. Undoubtedly, there seems to be a great deal of news flow which, at first blush, appears to be relevant to the credit markets. However, our mission of protecting client capital requires us to “separate noise from signal” and right now, there is a great deal of noise. We also wish to offer value to our readership through incremental commentary, and not necessarily a restatement of widely dispersed stories. Although the Credit Team actively monitors domestic macro developments, and particularly those impacting Fed policy actions, the internal separation of duties leads us to defer to our highly skilled Portfolio Manager colleagues on these matters. For these reasons, we will often remain silent if we feel that there is limited incremental value we can add, or if there is a topic that is out of our purview.

Australia central bank raises rates for third consecutive month with further increases expected

On Tuesday morning, the Reserve Bank of Australia (RBA) increased rates by 50 bps to 1.35%, the highest rate since May 2019, as part of a continued effort to restrain surging inflation. The rate increase was anticipated by most market participants and represents the fastest series of rate increases for the RBA since 1994. The increase is the third over the last three months, and RBA officials indicate that further increases are expected in an effort to normalize monetary conditions and to return inflation to target levels over time. The RBA’s interest rate moves align with those of other major central banks as countries around the world continue to battle high inflation. Further interest rate increases seem likely as long as inflationary concerns persist. 

All comments and discussion presented are purely based on opinion and assumptions, not fact. These assumptions may or may not be correct based on foreseen and unforeseen events. The information presented should not be used in making any investment decisions. This material is not a recommendation to buy, sell, implement, or change any securities or investment strategy, function, or process. Any financial and/or investment decision should be made only after considerable research, consideration, and involvement with an experienced professional engaged for the specific purpose. Past performance is not an indication of future performance. Any financial and/or investment decision may incur losses.

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