Global markets remained volatile throughout this month, with persistent concerns around tariffs, inflation, and geopolitical tensions driving sharp swings across asset classes. Early in the month, the announcement of sweeping US tariffs fuelled fears of stagflation, sending equities lower and bond yields higher. This was compounded mid-month by escalating US-China trade tensions, triggering a wave of risk aversion and a brief but sharp sell-off across global markets. Although a temporary tariff pause sparked a short-lived recovery, the underlying anxiety around US fiscal health, Fed independence, and broader global growth risks kept market sentiment fragile. Traditional safe havens like gold and the Swiss franc – but notably not the US Treasuries – outperformed. Instead bond markets swung between relief rallies and yield pressure.
In Australia, the RBA maintained a cautious tone, holding rates steady but signalling that further cuts remain on the table should external risks escalate. Domestic economic data was mixed. While labour market figures showed resilience and retail sales held up, consumer sentiment and business confidence wobbled under the weight of global uncertainty. The AUD suffered from early weakness amid tariff worries but partially recovered later in the month. New bond issuance activity fluctuated with global volatility, and attention turned to the upcoming May RBA meeting, which will be pivotal given the softer inflation outlook and rising concerns about external shocks.
In the US, strong GDP and corporate earnings prints were overshadowed by political instability and fears around Federal Reserve credibility, with President Trump's public pressure on Jerome Powell injecting fresh uncertainty into markets. Retail and manufacturing data pointed to underlying weakness beneath headline strength, reinforcing stagflation concerns. Meanwhile, in Europe, the economic picture remained mixed. Modest manufacturing rebounds and a slight easing in inflation provided some support, but underlying business confidence continued to erode. The European Central Bank faces a delicate balancing act, with the risk of external shocks from US trade policy weighing heavily on the region's recovery prospects.
In this edition, the AMPOL 2028 Subordinated Floating Rate Notes and Brisbane Airport 2034 Fixed Rate Notes were added to both the retail menu and the Sample Portfolio.
Retail Sample Portfolio
The Sample Retail Portfolio is a balanced portfolio whereby we aim to weigh an appropriate level of risk and return. Overall, it remains more skewed towards preserving capital rather than chasing yield. It aims to have 20 positions.
This month, the AMPOL 2028 Subordinated Floating Rate Note and the Brisbane Airport 2034 Fixed Rate were added replacing the AMPOL 2027 Floating Rate Notes and the Pacific National Finance 2029 Fixed Rate Notes – marginally enhancing the portfolio risk profile and duration. The running yield of the portfolio is currently at around 5.32%*, and the portfolio is an approximate $204k spend.
Over the past month, yields across the portfolio have risen, largely reflecting the broader move higher in global bond markets driven by persistent inflation risks, political uncertainty, and ongoing volatility. While Australian bonds have followed this global trend, the rise in yields have been more contained compared to US markets. Domestic factors, including softer inflation data and moderating economic growth, have helped temper the move higher. As a result, while the portfolio has experienced upward yield pressure, it remains better insulated than it would have been if it were heavily weighted toward US bonds, where yield increases have been sharper and more disorderly.
The Sample Retail Portfolio, along with the full list of retail available bonds, can be found on the FIIG Website here.
*Please note the indicative yield shown is the expected yield to the assumed maturity/call dates of
the bonds included in the portfolio, based on swaps rates at the time of writing.