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Mutual Daily Mutterings

Quote of the day…


“The less I know about other people’s affairs, the happier I am. I’m not interested in caring about people. I once worked with a guy for three years and never learned his name. Best friend I ever had. We still never talk sometimes.”.…Ron Swanson





Chart du jour…..AU inflation vs bulk index…







Overviewvigilance is a virtue”

  • Short and sharp today, it was a comedy of errors me getting to this point in the day.  Drove to work, parked the car, then realised, oops, no security pass despite remembering putting it in my pocket.  Drove home, tore my study apart, no pass…found it in the garden, next to where the car was parked.  Drove back into the office, 90 minutes wasted.  Thankfully a reasonably uneventful offshore session.  Given time constraints, short sharp comments from me, and a lot of borrowing other people’s words….
  • In short, markets were hesitant ahead of tonight’s (our time) US CPI and retail data prints, and release of Fed minutes from the last meeting.  Stocks dipped a touch, while treasuries clawed back some recent losses at the back end.  The front of the curve inched higher, likely reflecting the belief the Fed will have to move on inflation sooner than later.   Oil eased off the gas a smidge, while credit spreads did, well, not much.
  • Oil has obviously been on a tear lately, up +13.3% over the past month and up +60.3% YTD.  Overnight prices eased a touch with some narrative around some big punters punting on likely increased supply…”a prolonged move above US$85/bbl in Brent could increase White House pressure on Saudi Arabia to add more oil to the market. The Biden Administration could also tap the Strategic Petroleum Reserve, which would only be a short-term fix.
  • On the inflation front, the IMF pointed out that central banks need to be “very, very vigilant” and be ready to move early to tighten monetary policies if price pressures persist.  Seems the BOE is listening with Michael Saunders stating… “you can be aggressive in providing stimulus when it’s needed. But the flip side of that is to be willing to take away some of that stimulus when inflation risks are no longer to the downside but more to the upside.
  • Still on inflation, ”a closely-watched bond-market gauge of long-term inflation expectations — the 5-year, 5-year forward breakeven rate — is creeping back up toward its highest since 2014. A break above 2.5% (it’s currently 2.36%) would suggest bond investors are leaning toward higher prices for longer…. Equity traders seem to be still in the temporary camp, even those in the eye of the current inflation storm – commodities”.



  • Offshore Stocks – a mixed day in offshore markets with indices in aggregate softer, however looking under the hood we can see it lacked conviction.  The mix of winners vs losers at the stock level within in the S&P 500 was roughly even, and same for sectors – no participant ribbons here.  REITS (+1.3%) advanced most, followed by Discretionary (+0.7%) and Utilities (+0.7%).  In the veggie maths group, we had Telcos (-1.1%), Tech (-0.5%) and Healthcare (-0.5%), although it was Tech that had the most influence on the index.
  • Local stocks – local market closed down a third of a percent yesterday, a modest, but broad-based pull-back with 69% of stocks losing ground and only two sectors advancing.  Healthcare (+0.9%) and Staples (+0.2%) both earned themselves elephant stamps for trying.  At the other end of the daily gene pool was Tech (-1.5%), Energy (-1.1%) and Utilities (-0.8%).  Westpac pre-announced some asset quality pain and associated hit to earnings yesterday.  The big four bank will take a $1.3bn hit within its institutional banking operations following an annual impairment test.  The bank’s share priced dipped -0.5% on the day, lost in the wash of broader market declines.  Over the last 12 months the stock is up +34%, so still motoring along and there are some expectations the bank will undertake a chunky buyback. Despite the negative leads, as modest as they are, futures are pointing to a modestly positive open in the ASX 200 (+0.2%)


(Source: Bloomberg)


  • Local Credit – traders comments…”traded volume opened light although picked up throughout the day with outright buyers fuelled by the move in rates.  Secondary spreads are closing mixed”.  No change to major bank senior paper following the Westpac earnings announcement, but tier 2 paper did drift wider – broadly, not just WBC.  Traders are reporting…”one local seller took profit across the curve yesterday, seeing the street restock inventory and pushing spreads ~1 bp wider.
  • Bonds & Rates – local markets are calling out the RBA’s ‘no rate hikes to 2024’ rhetoric with the three-year yields rising another 5 bps yesterday, now yielding 0.58%, more than double where yields were just a month ago.  Treasuries overnight eased back a touch, ahead of tonight’s CPI data, so local markets might be spared further pain, for a day at least.



(Source: Bloomberg)


  • Local Macro – NAB monthly business survey results out yesterday…. Business confidence rebounded 19pts to +13 index points in September, with NSW (up 42pts to +27 index points) and Victoria (up 16pts to +5) driving the shift, while other states fell back somewhat. There were big improvements in confidence in wholesale (up 28pts), recreation & personal services (up 26pts), and construction (up 23pts).  NAB’s take on their data…”Business confidence rebounded strongly in September to be well above its long-run average, after falling well into negative territory in prior months. The improvement was driven by large shifts in confidence in NSW and Victoria following the announcement of reopening roadmaps in these states as well as rising vaccination rates across the country”…and…”interpreting this month’s results really depends if you are an optimist or a pessimist…businesses are really looking forward to reopening, and confidence increased markedly on the back of NSW and Victoria’s reopening roadmaps. The rise in confidence suggests they see the roadmaps that have been announced as sufficient to allow activity to really rebound in the coming months….still, confidence is more about hope for the future than what is happening in the present, and on that front, conditions really deteriorated which shows that lockdowns are taking a toll, despite the resilience the economy has shown through this period”.
  • Offshore Macro – US CPI tonight the main focus.



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: 0.26%
MIF – Mutual Income Fund
Gross running yield: 1.40%
Yield to maturity: 0.78%
MCF – Mutual Credit Fund
Gross running yield: 2.62%
Yield to maturity: 1.70%
MHYF – Mutual High Yield Fund
Gross running yield: 5.49%
Yield to maturity: 4.24%