Close
Leave Feedback
Welcome to the new btim.com.auTake a two minute tour to see what we've changed
Hi there! Welcome to the new look Pendal website... Take a two minute tour to see what we’ve changed.
Mainstream Online Web Portal
LoginInvestors can view their accounts online via a secure web portal. After registering, you can access your account balances, periodical statements, tax statements, transaction histories and distribution statements / details.
Advisers will also have access to view their clients’ accounts online via the secure web portal.
The Point
Quick, actionable insights for investors
Income and Fixed Interest
What this week’s rate rise means for cash investors
The cash rate now looks like it will be closer to 1.75% by the end of 2022 after this week’s jump to 0.35%.
“It’s better times ahead for cash investors, though the speed of the move has not been without some pain,” says our head of cash strategies Steve Campbell.
Six-month yields are now likely to sit closer to 1.65%, up from 1.48%, says Steve.
“Those sitting in term deposits may enjoy having their deposits valued at par — but they are accruing at a much lower rate than other opportunities in the market.”
Investors should be wary of short-dated TDs.
“First and foremost cash should be there to provide liquidity while preserving capital. TDs are great at preserving capital. But liquidity? It’s almost quicker to sell a house than wait for TDs to mature.
“I expect we’ll see more volatility, even by cash fund standards in the coming months.
“Short-dated, highly liquid assets will quickly reflect the changes that the RBA will deliver in the coming months. It’s why I think our Pendal Stable Cash Plus Fund is well placed in this environment.”
Could higher rates work against lower inflation? And what would that mean for bonds?
Quick view
Could higher rates work against lower inflation? And what would that mean for bonds?
Ongoing demand is blunting the impact of higher rates, argues Oliver Ge, an assistant PM with Pendal’s income and fixed interest team.
“When households are in decent shape, as they are today – when you have wages growth at decade highs, unemployment near record lows, and savings plentiful – you end up with an environment where people are much less sensitive to price changes,” he says.
“As a central banker you see inflation rising and your natural instinct is to raise rates. But the usual transmission mechanism is broken.”
Higher interest rates will eventually impact, but they’re not working just now, argues Oliver.
He believes there could be a breaking point mid-next year, leading to a reversal from the RBA.
That could make bonds even better value than they are today, he says.
Oliver Ge: Fears of a ’70s inflation re-run are overblown
Quick view
Oliver Ge: Fears of a ’70s inflation re-run are overblown
US inflation numbers were higher than expected in August, prompting more headlines about a second wave of inflation and further interest rate rises.
Can investors really expect a 1970s inflation re-run?
“There’s a lot of commentary on a possible ’70s-style, second wave of inflation,” says Oliver Ge, a portfolio manager with Pendal’s income and fixed interest team.
“But I don’t believe we’re going down that path. We’re not even close to a rerun of the 70s.”
Higher US inflation in August is just one uptick after 13 consecutive months of disinflation – and inflammatory news headlines are unwarranted, Oliver argues.
“The difference is that back then, the US was highly oil-dependent, and it also was experiencing a massive devaluation of its currency. Put the two together and it triggered a big wave of inflation.
“The US is no longer energy-dependent – in fact it is an exporter of oil. Unionisation is no longer widespread. There’s none of the original catalysts that prompted the blowout.”
Recession risk is still out there. Here’s why
Quick view
Recession risk is still out there. Here’s why
The risk of recession appears to be side-lined for now, but investors may be overlooking one factor, argues Pendal’s Oliver Ge.
Much of discussion about higher interest rates has been focused on the impact of bigger mortgage repayments for homeowners.
But tighter credit conditions and stricter collateral requirements for business are likely to have a more significant impact, says Oliver, an assistant PM with our fixed interest team.
“Higher interest payments are a strain for businesses, but it’s when you lose access to credit that the stress comes through.”
There is evidence of tighter lending standards in the US which will likely flow through to defaults in six-to-nine months, he says.
“The prospect of recession has for the moment been sidelined, but the risk is still very much there.”
Inverted yield curve: what it means (and it’s not what you think)
Quick view
Inverted yield curve: what it means (and it’s not what you think)
Longer-dated bonds usually pay higher interest rates to compensate for the increased risk over time.
But right now short-term interest rates are moving closer to — and even higher than — long-term rates.
This “yield curve inversion” is a very important signal since it usually means a recession is imminent.
But that’s not the case this time, argues Oliver Ge, an assistant portfolio manager with our Income and Fixed Interest team.
With a strong global economy, low unemployment and benign equity market conditions, analysts have been looking for an alternative explanation for the inversion.
The inversion may be explained by expectations that current inflationary pressures are only short term, says Oliver.
“Short-dated bond yields are higher because they carry a premium to their longer-dated counterparts to compensate investors for bearing higher near-term inflation risk.
“That’s what’s driving the inversion.”
Why bonds are worth considering even as rates rise
Quick view
Why bonds are worth considering even as rates rise
Most investors understand that when rates go up, bonds go down.
But what if bonds had the potential to provide an investment return during central interest rate hiking cycles?
It’s possible says Oliver Ge, a portfolio manager with Pendal’s Income and Fixed Interest team.
“The key is that it depends on how much is priced into the bond market at the point central banks start lifting rates.
“Looking at history, an investor who buys bonds at the moment of the first rate hike in a cycle and sells at the last rate hike actually gets quite a substantial return.”
Since the 90s there have four rate hiking cycles in Australia, each averaging an increase of 2.25 per cent to the RBA’s policy rate Oliver says. The annualised bond return over the same period was more than 4 per cent.
“The compelling story is don’t ignore bonds when rates are rising — they can still give you mid-single digit returns. That’s quite significant in a market where equities are negative.”
Look to government bonds instead of term deposits
Ultra-loose monetary policy is creating exceptions to risk and reward – and bringing opportunities for better returns, says Pendal’s Oliver Ge.
Investors who choose the safety of a government bond held to maturity are now offered better returns than a nominally higher-risk bank term deposit.
“The big banks are offering about 0.25 per cent on a one-year term deposit — $25 on a $10,000 investment.
“A one-year Australian government bond is paying 1 per cent — four times as much money.” State government bonds offer more — as high as 1.6 per cent for West Australian semi-government bonds.
The anomaly exists because the RBA is providing very cheap funding to the banks, meaning they can keep deposit rates artificially low without affecting the financing of their lending businesses.
By contrast, government bonds are issued into a competitive global market and rates are set by investor demand.
It’s likely to stay this way as long as banks have access to cheap funding.
“This is a genuine opportunity to get a lot more juice with the same or better safety – assuming you hold to maturity.”
China isn’t likely to invade Taiwan any time soon. Here’s why
Quick view
China isn’t likely to invade Taiwan any time soon. Here’s why
It’s understandable that investors pondering their exposure to Russia’s invasion of Ukraine might also think harder about the China-Taiwan stand-off.
But a Chinese invasion of Taiwan is a very low probability event in the short or medium term, says Pendal’s Oliver Ge.
“Near term the Chinese Communist Party has other priorities at stake. President Xi has promised to rectify growing domestic discontent over diminished living standards. Housing affordability and employment opportunities are key focal points for the CCP leadership.
“In the medium term, Taiwan’s support from the US remains crucial. Remember that Taiwan (but unfortunately not Ukraine) is of great strategic importance to Washington. China has no appetite for a direct confrontation with the US.
“These points don’t negate the possibility of a conflict in the longer term. A unified China is arguably the biggest political objective of the CCP.
“But for now the carrot of economic cooperation remains the preferred policy over brute force.”
Amy Xie Patrick: How tariffs, tech and rates are shaping 2026
Play podcast
</iframe
Tim Hext: Why 2026 could favour bond investors
Play podcastTim Hext: Why 2026 could favour bond investors
As tariff news has died down, markets have come flying back in the last few months.
“But we do have a world now where the US tariff rate on average is around 18%,” observes Pendal’s head of government bond strategies, Tim Hext.
“That is not a world we have seen for almost 100 years, not since World War II.”
But it’s an environment made for active investors, says Tim in this new short podcast.
It can take years to understand the full impact of trade tariffs, yet markets tend to be very short-term focused, he says.
“That does present a lot of opportunities for an active manager,” says Tim.
“It gives does give us plenty of good opportunities to add value in active portfolios, and that’s what we’re doing at the moment.”
Elise McKay: What’s driving rotation in equities
Play podcastElise McKay: What’s driving rotation in equities
Fast podcast: Tariff uncertainty means opportunity for active investors
Play podcastFast podcast: Tariff uncertainty means opportunity for active investors
As tariff news has died down, markets have come flying back in the last few months.
“But we do have a world now where the US tariff rate on average is around 18%,” observes Pendal’s head of government bond strategies, Tim Hext.
“That is not a world we have seen for almost 100 years, not since World War II.”
But it’s an environment made for active investors, says Tim in this new short podcast.
It can take years to understand the full impact of trade tariffs, yet markets tend to be very short-term focused, he says.
“That does present a lot of opportunities for an active manager,” says Tim.
“It gives does give us plenty of good opportunities to add value in active portfolios, and that’s what we’re doing at the moment.”
Loading posts...
Loading posts...