What are the implications of “MM believes that the differential in cash rates between Australia & the US can reach 2%.”

Hi Don,

Firstly the interest rate implications arem2 fold although most of the journey towards 2% is already in the rear-view mirror:

1. $US earners such as CSL should continue to perform strongly. Macquarie (MQQ), Resmed (RMD), James Hardie (JHX) are other examples of companies which benefit from that theme.
2. The ASX should outperform the S&P500 over the coming months although a recovery in tech which we believe is brewing should even up the playing field as it’s a more dominant part of the US market.

We are still holding 15% of the Growth Portfolio in Cash while our Active Income Portfolio continues to hold a large exposure to the likes of hybrids i.e. we are comfortable adopting a conservative approach at this stage of the economic cycle.  In the short term though, if the market does get jittery, credit spreads will likely increase particularly if the concern is related to the broader financial system, so in that environment, Government Bonds would be better than hybrids.

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Australian 3-Year v US 2-Year Yield

LAST UPDATED 10/03/2023 13:29

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Australian 3-Year v US 2-Year Yield

LAST UPDATED 10/03/2023 13:29