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

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.

Moderating inflation is the trend of the year. Here’s what it means for investors 

With moderating inflation as the trend of the year, investors can be more assured in their bond allocation, argues Pendal assistant PM ANNA HONG  

MODERATING inflation is the trend of the year. 

Across the globe, economies are seeing inflation come down as the resumption of supply chains eased price pressure on goods. 

Central banks have taken the fight to services inflation — which has held on even as goods inflation eased. 

In 2023, markets whipsawed on inflation and unemployment data releases, as investors try to pick the end of the rate-hiking cycle. 

The latest US Consumer Price Index data came in much weaker than expected on Wednesday, sparking a Wall Street rally. 

The US CPI increased 3.2% in the year to October — down from 3.7% annualised in September.

We can now see the light at the end of the tunnel. 

US inflation cools 

US inflation for October came in at a cool 3.2% year-on-year.  

On a monthly basis, October was flat — the slowest since July 2022 — with core services handing out the biggest downside surprise.  

Markets welcomed the news that this time around the inflation slowdown is much more broad-based, rather than just a goods-fuelled moderation.  

With the US Federal Reserve’s July rate hike still working its way through the economy in the months ahead, markets swiftly took out most of the pricing for any future US rate hikes. 

Investors now seem convinced that the last rate hike by US Fed is behind us. 

The story back home 

Back here in Australia, the picture does not look quite the same.  

The most recent CPI (Q3, 2023) surprised to the upside instead, printing at 5.4% year-on-year. 

Australia economic strength was confirmed with business conditions continuing to improve in the latest NAB business survey. 

Headline capacity utilisation moderated to 84% but remains well above long-run average. Price pressure eased on business inputs but remains elevated at 1%. 

We are probably six months behind the US. 

US CPI last had a five-handle on it back in March. 

Australian capacity utilisation remains stubborn at 84% while the US has dropped below 80%. 

The US Fed has been on pause since its July rate hike while the RBA just raised ours. 

Even though we may be lagging the US in the disinflation journey, inflation is on the same trajectory here. 

Elsewhere, the UK CPI dropped from 6.7% to 4.6% this week. 

What it means for bonds 

Bond investors can be more assured that we are seeing the light at the end of the tunnel. 

The gap between Australian and US front-end rates should narrow as US Fed starts a rate-cutting cycle ahead of the RBA.  

That should buoy short-end US treasuries and weaken the USD against AUD. 

For Australian investors, any gain in short-end treasuries should be largely offset by foreign exchange losses. 

For long-end bonds, we believe the risk-reward of Aussie government bonds outweighs the US treasuries. 


Firstly, Australian 10-year yields at 4.56% are more attractive than US 10-year treasuries at 4.45%. 

Secondly, the steepness of the Australian yield curve gives investors good carry-and-roll versus the inverted US yield curve. 

Find out about

Pendal’s Income and Fixed Interest funds

Finally, the supply-demand dynamics work in Australia’s favour. 

Australia is running a budget surplus while the US is running a budget deficit.  

This means that on the supply side, the Australian government does not need to issue more bonds.  

On the other hand, the US has raised its planned 10-year issuance size by US$2 billion to US$40 billion. 

On the demand side, the number of captive audiences for US treasuries has dwindled. 

US Fed — the biggest buyer — is now a seller, not a buyer.  

The reliable Japanese have shied away due to the weakness of the Yen.  

And US commercial bank — having learnt from the mistakes of Silicon Valley Bank — are rebalancing away from long-end US treasuries. 

With moderating inflation as the trend of the year, investors can be more assured in their bond allocation. 

On balance, we believe Australian bonds should provide better risk-reward ahead. 

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.

With the goal of building the most defensive line of funds in Australia, the team oversees some $20 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 at November 15, 2023. 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