25 November 2022

Week in Review

The unemployment rate fell unexpectedly last week to 3.40%, down 0.10% from the month prior spurred mostly by an increase in full-time positions. The print takes Australia’s unemployment level to the lowest point in 48 years.

Shorter-end government bond yields edged higher post release as the data will do little to dissuade further RBA interest rate hikesAnalyst consensus has a 25bp increase priced into the December meeting.

Trade Idea: IAG Hybrid

IAG are in the market with a new AT1 (IAGPE) – pricing [3.50%-3.70%] above 3m BBSW. This new IAG Hybrid reflects the inherent value in Tier 2 Market.

This deal offers value against the AT1 curve (insurance) and is pricing fair versus the major AT1 curve. We examine the insurance opportunity set in this Trade Idea, click below to read more.
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Trade Idea: Nufarm FY22 Results

Nufarm, a crop protection and specialist seeds company, recently released their FY22 results. In this week’s Trade idea, we discuss the Nufarm’s FY22 results and suggest why investments in this category might be a beneficial addition.

Matthew Macreadie looks at Nufarm’s financials and draws light on the possibility of Nufarm being a ratings upgrade candidate in the making.
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Chart of the Week: Forward Returns in Bond Markets

The convexity present in local bond markets, coupled with recessionary fears, make 20-30% returns in high duration*, low spread risk bonds look feasible compared to history. BondAdviser examined data back to 1989 to arrive at this conclusion.

Source: BondAdviser as at November 2022

*High duration means greater than 5 years. Based on bonds rated BBB- to AAA.

Bonds: IAM Bond Rate Sheet

View Rate Sheet

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