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Mutual Daily Mutterings

Quote of the day…


“It took me 17 years to get 3,000 hits in baseball.  I did it in one afternoon on the gold course…” – some US baseballer





Chart du jour…US reporting season, 80% done

Source: Bloomberg, Mutual Limited



Butterfly Spread…”



Overview from doves to hawks ”

  • A mixed session globally.  European stocks and bonds gained, while US markets dipped on the back of some hawkish Fed comments and weaker jobs data.  Only the NASDAQ was able to keep its nose above water.  COVID jitters are also likely weighing on sentiment. With the Delta variant there is the potential for consumers to pull back spending on services according to businesses surveyed in the recent ISM Services Index.  Gold pared gains and oil extended declines after US crude stockpiles unexpectedly increased by the most since March.
  • Fed Vice Chair Richard Clarida is quoted as saying the central bank is on course to begin draining the punch bowl and that official rates could increase by 2023.  He also said action on tapering later this year is looking likely.  To date Clarida has been part of ‘Team Dovish’, so this hawkish turn has markets all jacked up and expecting some meaningful taper talk, possibly even some action, at the Jackson Hole Symposium at the end of the month.  On the inflation front, the transitory theme stands firm “the imbalances between supply and demand that are pushing up prices to dissipate over time”. Fed colleague – from Dallas – Robert Kaplan told Reuters the Fed should start reducing its bond-buying program “soon.”
  • In bonds, 10-year treasury yields fell to 1.13% in early pricing action, which came on the tail of disappointing jobs figures (biggest miss to consensus in more than two-years).  Then Clarida spoke and yields jumped into action, climbing over 1.2% (+8 bps) on the remarks before drifting back a smidge to 1.17%…which is where yields were just 24 hours ago.
  • Some observations from US reporting season with over 80% of the S&P 500 now reported.  While the tea leaves and chicken giblets about growth uncertainty read reasonably well, among the firms that have provided guidance, just under a third have lowered their earnings estimates. That’s the highest share since the three-month period starting April 2020, according to Bloomberg data, so a somewhat bearish trend.




  • Offshore Stocks – weaker than expected ADP jobs data and hawkish Fed comments took some jam out of the US market’s donut.  The DOW (-0.9%) and S&P 500 (-0.5%) both losing ground, while the now considered safe-haven NASDAQ (+0.1%) kept its nose relatively clean.  It was a reasonably broad-based retreat, with 76% of the S&P 500 closing in the red and only two sectors, Telcos and Tech, able to post daily gains, +0.2% for both.  Energy (-2.9%) haemorrhaged most, followed by Industrials (-1.4%), and Staples (-1.3%).  The index is still bumping along its all-time highs and has been quite resilient in the face of rising COVID headwinds and expectations of tightening monetary policies.
  • Local stocks – a good day for local stocks yesterday, up +0.4% for the ASX 200, although only just over half of the index advanced.  Materials (+1.2%), Energy (+0.9%), and REITS (+0.7%) led from the front, while Healthcare (-0.5%), Industrials (-0.2%) and Discretionary (-0.1%) were softer on the day.  Weaker offshore leads have futures marginally in the red.


(Source: Bloomberg)



  • Offshore Credit – US IG saw six-borrowers print $4.8bn.  Five of the six countable offerings were rated on the cusp of investment grade as lower-rated borrowers looked to attract investors amid current low rates and tight credit spreads.  Order books were well supported with an average 3.3x coverage ratio and minimal new issued concessions.  Spread compression was -27 bps, inside the YTD average of -24 bps.  EU IG was quiet.
  • Local Credit – from the traders…”a modest session for domestic credit with much of the action seen in SSA’s and Tier 2. Spreads close mostly unchanged across the complex”.  In financials “flow was two way and light in size across both majors and regionals. Little to touch on in terms of noteworthy trades. Spreads unchanged bar the Jan 25’s which have crept in half a basis point
  • Bonds & Rates – while stocks are largely shrugging off COVID jitters, bonds on the other hand are more circumspect, more cautious, which is what there for.  Local bonds did little yesterday and remain at almost 6-month lows.  With the jump in treasury yields, if the world is right, and things follow the normal order of events, local yields will rise today also.


(Source: Bloomberg)


  • Macro – a big miss in US jobs data out last night.  Private employers added +330K jobs in July, as per the ADP report, which was less than half the consensus forecast and way below June’s revised +680K.  From NAB…”while not always a reliable guide to nonfarm payrolls, the ADP report inevitably will have many questioning the consensus for a private payrolls print of 718K on Friday.  Cautious remarks by ADP’s chief economist, Nela Richardson, didn’t help sentiment either, noting that the July report was a marked a “slowdown from the second quarter pace in jobs growth” with ““Bottlenecks in hiring continue to hold back stronger gains, particularly in light of new Covid-19 concerns tied to viral variants.”.  The ‘final’ IHS Markit services index fell from 64.6 to 59.9 in July (survey: 59.8).  The ISM services index rose from 60.1 to a record 64.1 in July (survey: 60.5).  MBA mortgage applications fell by 1.7% last week.


Click here to find the full PDF from our Chief Investment Officer’s daily market update.



Scott Rundell, Chief Investment Officer

T: +61 3 8681 1907



Mutual Limited Daily Update

Mutual Funds

MCTDF – Mutual Cash Fund
Gross running yield: 0.36%
MIF – Mutual Income Fund
Gross running yield: 1.45%
Yield to maturity: 0.75%
MCF – Mutual Credit Fund
Gross running yield: 2.57%
Yield to maturity: 1.63%
MHYF – Mutual High Yield Fund
Gross running yield: 5.71%
Yield to maturity: 4.05%