A World Rebounding from the Dysfunction of 2020… and the Implications for Bonds.
Whilst inflation in Australia isn't anticipated to occur overnight, expectations are starting to shift. After the highest levels of monetary and fiscal stimulus ever experienced, the Australian economy is rapidly recovering with the property and banking sector being key beneficiaries.
Simon Mullumby, Head of Australian Cash & Bonds and Attilio J. Qualtieri, Senior Bank Credit Analyst examine the question: Is the economy getting too hot, too cold or is it just right?
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References to the State Street Floating Rate Fund ("the Fund") in this communication are references to the managed investment scheme domiciled in Australia, promoted by SSGA Australia, in respect of which SSGA ASL is the Responsible Entity. This general information has been prepared without taking into account your individual objectives, financial situation or needs and you should consider whether it is appropriate for you. You should seek professional advice and consider the product disclosure document and target market determination , at www.ssga.com, before deciding whether to acquire or continue to hold units in the Fund. Investing involves risk including the risk of loss of principal.
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The views expressed in this material are the views of Simon Mullumby, Head of Australian Cash and Bonds and Attilio J. Qualtieri, Senior Bank Credit Analyst through the period ended 26 May 2021, unless otherwise stated and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
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The value of the debt securities may increase or decrease as a result of the following: market fluctuations, increases in interest rates, inability of issuers to repay principal and interest or illiquidity in the debt securities markets; the risk of low rates of return due to reinvestment of securities during periods of falling interest rates or repayment by issuers with higher coupon or interest rates; and/or the risk of low income due to falling interest rates. To the extent that interest rates rise, certain underlying obligations may be paid off substantially slower than originally anticipated and the value of those securities may fall sharply. This may result in a reduction in income from debt securities income.
All the index performance results referred to are provided exclusively for comparison purposes only. It should not be assumed that they represent the performance of any particular investment.Government bonds and corporate bonds generally have more moderate short-term price fluctuations than stocks but provide lower potential long-term returns.
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The back-tested performance shown on slide 24 of the presentation was created by the Strategy and Research Team. Returns, risks and correlations are backtested from 31 March 2000 to 31 December 2020 based on the following universe: Bloomberg AusBond Govt 0+ Yr Index and Bloomberg AusBond Credit FRN 0+ Yr Index. The backtested returns do not include management fees or rebalancing costs.
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