Market commentary: Markets focussed on May CPI; Fed being given the benefit of the doubt

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1. Markets focussed on May CPI. Fed being given the benefit of the doubt but there is doubt! All eyes tonight on the May CPI report. The market expectation is for a ‘headline’ rise of 0.4% mom or 4.7% yoy and for the ‘core’ arise also of 0.4% mom or 3.4% yoy. Such an increase

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Are you experienced? (Apologies to Jimi Hendrix)

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While continuing to acknowledge a more positive outlook as far as growth and employment are concerned, the absence of any “lived experience” of price or wage inflation will likely see the RBA continue with the application of historically high levels of monetary accommodation, at least in the very near-term. More importantly, I expect the Governor

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Markets give the Fed the benefit of the doubt – but there is doubt

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The inflation scare on the back of April’s CPI ‘blowout’ appears to have abated somewhat. A concerted effort from key Federal Reserve speakers, who have sought to cast any inflation as “transitory”, appears to have worked, as bond yields have retreated from their highs and equity markets have ground out rallies. Fed Vice Chair Richard

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Deliver us from COVID but lead us not to inflation

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The outlook for global and Australian markets is positive, according to GSFM and its fund manager partners Munro Partners and Tribeca Investment Partners. They say markets are supported by easy monetary conditions, ongoing fiscal support and global economies which continue on a path towards normality as COVID-19 vaccines are rolled out and the lagged impacts

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RBA eschews further monetary stimulus – where to now?

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Not surprisingly at yesterday’s Board meeting the RBA eschewed the application of any further monetary stimulus following the announcement of a comprehensive array of measures in November. However, it reiterated that the likelihood of an uneven recovery and a concern about ongoing high unemployment and associated subdued wage growth would mean that policy settings remain

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US equity markets are close enough to historic highs. Are things really that good?

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Equity markets appear to have convinced themselves that a Biden Presidency with a Democratic House and a Republican Senate is a ‘goldilocks’ scenario. Certainly, encouraging news on the vaccine front has been important in the recent equity ebullience pushing negative news on a second wave of increasing magnitude into the background. But that second wave

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Inoculating markets from economic influenza – investing in a post-COVID world

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Economic uncertainty existed before the COVID-19 pandemic, but investment performance depends on more than economic fundamentals, according to GSFM and its fund manager partners Payden & Rygel, Munro Partners and Redpoint Investment Management. Stephen Miller, investment strategist at GSFM, says investing uncertainty is elevated, not just as a result of the COVID-19 pandemic, but also

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RBA continues to eschew a negative rates policy

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While acknowledging the severe damage to the economy from the COVID-19 crisis and the now elevated potential risks of ‘second wave’ COVID-19 infections, the Governor and RBA Board continue to eschew the canvassing of potential “innovative” measures in monetary policy – such as the contemplation of a negative rates policy. Instead, the Governor and Board

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Volatility stirs as fears grow over a ‘second wave’ and IMF downgrades global growth outlook

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Key points: Market sentiment has turned negative on concern that the spreading coronavirus could force policy makers to slow the pace, or reverse, business re-openings. The International Monetary Fund downgraded its outlook for the world economy, projecting a significantly deeper recession and slower recovery than it anticipated just two months ago. We expect trade tensions

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GSFM’s Stephen Miller comments on the Federal Reserve June statement

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Fed forecasts no increase in rates until at least the end of 2022 The Federal Reserve projected interest rates will remain near zero through 2022 with the Fed’s ‘dot plot’ revealing a flat profile out to end 2022. The Fed also pledged to maintain at least the current pace of asset purchases at approximately $80b per month As part

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