The Australia money markets went onto Easter in a distressed state, reflected by the widest credit margins we have seen for some time
- Major bank senior +100bps
- Major bank T2 +190bps
- Regional bank senior +110bps
- Regional bank T2 not really trading
- Corporate bonds well offered and not really trading
The bond market is not dysfunctional to the extend seen in March 2020, when even commonwealth treasuries lacked bid support and volumes collapsed, but we do not expect liquidity to improve until after the Anzac Day weekend.
The markets are trapped in a vacuum of uncertainty by the Trump Administration’s decision to suspend the announced tariff increased for 90 days. Adding to this uncertainty is the announced intention to impose industry sector specific tariffs (e.g. semi-conductors) at some point in this 90-day window.
All of our investment management mandates are well positioned with both low fixed and credit duration. Performance will be driven by the strong coupon running yields.
