Hi there! Welcome to the new look Pendal website... Take a two minute tour to see what we’ve changed.
Login

Mainstream Online Web Portal

Investors can view their accounts online via a secure web portal. After registering, you can access your account balances, periodical statements, tax statements, transaction histories and distribution statements / details.
Advisers will also have access to view their clients’ accounts online via the secure web portal.

Anna Hong: Bad unemployment numbers bring good news


A weekly income and fixed interest snapshot from Pendal assistant portfolio manager ANNA HONG

FOR ALMOST two years economic data points have been accompanied with lockdown disclaimers — pre-lockdown, post-lockdown, back into lockdown.

Hopefully 2022 brings more incisive data as high vaccination rates put the lockdowns behind us.

The headline unemployment numbers released yesterday briefly shocked the market.

Positivity from the end of lockdowns was briefly snuffed out as the Australian unemployment rate jumped from 4.6% to 5.2% — much higher than the market consensus. 

That was until we got to the fine print at the end.

The release was backward looking and reflected job numbers from Sep 26 to Oct 9.

Find out about

Pendal’s Income and Fixed Interest funds

That’s before NSW came out of lockdown — much less Victoria — which meant unemployment numbers in VIC and NSW dragged the national number higher.

Moreover, most borders were still shut as state policies outweigh federal.

That meant tourism-related industries in Queensland were affected, while states less reliant on tourism such as WA and NT saw an improvement in unemployment. 

Source: Australian Bureau of Statistics

So the glass is half full, given those were essentially lockdown unemployment numbers.

Furthermore, the consumer sentiment numbers around job security fears are at their lowest in more than seven years.

That’s evidenced by the labour turnover in NSW, which showed signs of better health as many workers switched jobs for better opportunities and better pay.

The economic outlook gets better as we add improving consumer spending intentions to the mix.

Higher spending in good, services and dwellings will help the states’ bottom line with stamp duty receipts and GST handouts from the federal government.

Source: Commonwealth Bank of Australia
Market moves 

Globally, most CPI numbers printed higher than consensus.

Yields rose due to global sentiment around inflation.

Australia’s unemployment number miss did not shift the yields significantly.

Source: Bloomberg
Market Implications 

Short-end cash maintains its slight curve with six months BBSW still holding its ground above the RBA cash rate of 10bps. 

Semi-government spreads have widened with issuances now coming through at close to its historical spread of +50bps to commonwealth government bonds.

The recently tendered TCV 2034 is now trading at +48bps to CGL. As semi spreads normalise the accruals can once again provide a healthy income to investors.  

Additionally, the improving Australian economy will result in higher tax receipts.

Potentially that will improve the states’ finances and be supportive of semis on reduced supply.

 


About Anna Hong and Pendal’s Income and Fixed Interest team

Anna Hong is an assistant portfolio manager with Pendal’s Income and Fixed Interest team.

Pendal’s Income and Fixed Interest boutique is one of the most experienced and well-regarded fixed income teams in Australia. In 2020 the team won the Australian Fixed Interest category in the Zenith awards.

With the goal of building the most defensive line of funds in Australia, the team oversees A$22 billion invested across income, composite, pure alpha, global and Australian government strategies.

Find out more about Pendal’s fixed interest strategies here


About Pendal Group

Pendal is an independent, global investment management business focused on delivering superior investment returns for our clients through active management.

Contact a Pendal key account manager


This information has been prepared by Pendal Fund Services Limited (PFSL) ABN 13 161 249 332, AFSL No 431426 and is current as at November 12, 2021.

PFSL is the responsible entity and issuer of units in the Pendal Monthly Income Plus Fund (ARSN: 137 707 996) and Pendal Dynamic Income Fund (ARSN: 622 750 734) (Funds). A product disclosure statement (PDS) is available for the Fund and can be obtained by calling 1300 346 821 or visiting www.pendalgroup.com. The Target Market Determination (TMD) for the Fund is available at www.pendalgroup.com/ddo. You should obtain and consider the PDS and the TMD before deciding whether to acquire, continue to hold or dispose of units in the Fund.

An investment in the Fund or any of the funds referred to in this web page is subject to investment risk, including possible delays in repayment of withdrawal proceeds and loss of income and principal invested.

This information is for general purposes only, should not be considered as a comprehensive statement on any matter and should not be relied upon as such. It has been prepared without taking into account any recipient’s personal objectives, financial situation or needs. Because of this, recipients should, before acting on this information, consider its appropriateness having regard to their individual objectives, financial situation and needs. This information is not to be regarded as a securities recommendation.

The information may contain material provided by third parties, is given in good faith and has been derived from sources believed to be accurate as at its issue date. While such material is published with necessary permission, and while all reasonable care has been taken to ensure that the information is complete and correct, to the maximum extent permitted by law neither PFSL nor any company in the Pendal group accepts any responsibility or liability for the accuracy or completeness of this information.

Performance figures are calculated in accordance with the Financial Services Council (FSC) standards. Performance data (post-fee) assumes reinvestment of distributions and is calculated using exit prices, net of management costs. Performance data (pre-fee) is calculated by adding back management costs to the post-fee performance. Past performance is not a reliable indicator of future performance.

Any projections are predictive only and should not be relied upon when making an investment decision or recommendation. Whilst we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The actual results may differ materially from these projections.

For more information, please call Customer Relations on 1300 346 821 8am to 6pm (Sydney time) or visit our website www.pendalgroup.com

Keep updated
Sign up to receive the latest news and views