Hi Scott,
The Australian Composite Bond ETF (OZBD) holds a mix of government, semi government (which is states), government backed agencies and corporates. These are fixed rate bonds and their prices will be impacted by the markets view of forward interest rates and risk. More benign inflation as we saw this week would normally lead to higher bond prices and lower yields which would mean OZBD goes up. Higher inflation = higher interest rates and lower bond prices so OZBD would go down. They also have an allocation to corporate bonds which are influenced by the markets perception of risk. When markets are nervous, the spread to hold higher risk securities widens. For us, OZBD is a hold however our weighting is 4% in the Income Portfolio so it’s not high conviction, simply a solid member of our fixed income sleeve bought on the view that bond yields had peaked.