US election 2024 - The view from the bank of the Rubicon

The scope of power for the US president is altering dramatically just as the US sets out to vote for its next President. This has massive ramifications for the world at large, but also immediate impacts for investors. This piece will seek to explain how we got here and what might happen in the various scenarios for the November 2024 US Presidential Election.

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Actively manage bond maturities to improve returns

Returns on bonds can be further increased when bonds approaching their maturity or call dates are reinvested ahead of time. We look at the benefits of actively managing maturities and early redemptions to get the most out of fixed income portfolios.

The Federal Budget 2024

We are approaching a consequential point for Federal finances and the macroeconomic backdrop. However, the real changes were set in motion in 2018, when the Stage 3 tax cuts were first legislated. Most other developments in the 2024 Budget are of decidedly modest importance in comparison.

Indexed annuity bonds (IAB) - how they work and their many benefits

While IAB bonds are sometimes perceived as being complex for their unique features, they are not so complicated once you know how to think about them. IABs pay quarterly payment that has it’s purchasing power preserved through indexation to inflation. Because the cash flow is indexed to inflation, the yield includes an inflation assumption. The par value needs to be calculated, but works in a similar way to a mortgage, with each quarterly payment having both an interest and a principal component.

Education (basics)

Dynamics in the labour market are very material to the RBA

The RBA keeps an eye on the Australian labour market as it is one of the most important indicators of the growth of the economy. Labour data is a direct target of monetary policy via the RBA’s employment mandate, but also an indirect one since it so clearly affects inflation dynamics. Over the last six months or so, the unemployment rate has trended sideways and still remains at extremely strong levels. While the unemployment rate remains low and inflation elevated, there is little reason for the RBA to cut interest rates.


Portfolio Construction: The interaction of yield, slope, and return

The Lucky 7 piece steps through four different possible outcomes for the RBA. The scenarios range from an unexpectedly high interest rate outcome to a rate cut cycle that would only occur if the economy materially weakened. In between are two much more likely scenarios that involve much less movement in the RBA rate.

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