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.

Tim Hext: Where the RBA’s head is at right now

What can we learn about the RBA’s mindset in its latest meeting minutes? Pendal’s head of government bond strategies TIM HEXT has a few insights

THE Reserve Bank is very low on confidence about the economic outlook, based on the newly-released minutes from its last policy meeting on May 2.

In fairness these are uncertain times, but the very well-resourced RBA is expected to have better insights than anyone.

The main question is how big an impact have we seen from 3.75% of rate hikes in 12 months.

There was little guidance or insights in the minutes, other than observations that retail sales and output are slowing.

Instead, we had general comments like this:

Members judged that the forecasts were still consistent with the economy remaining on the narrow path on which inflation comes down steadily and the unemployment rate increases but remains below pre-pandemic levels. At the same time, members acknowledged that there were significant uncertainties, and that history highlights the challenges of staying on such a path.”

It seems the RBA decided back in early February that three more hikes were needed, and the pause in April was just to make sure the March credit wobbles didn’t return.

In other words, the onus was on the April data to be weak enough to discourage another hike in May — which it wasn’t.

Now the narrative has changed.

The RBA seems happy with 3.85% at least for a few more months.

The onus remains on the data to be strong enough against expectation for another hike. This has not stopped markets pricing something in.

A reliance on lagging data

By definition, the RBA is always data dependent.

Find out about

Pendal’s Income and Fixed Interest funds

But for now, it’s the lagging data like employment — and very laggy data like wages and inflation — driving decision making.

This risks a policy mistake of overtightening.

As the RBA itself expects, wages won’t peak till later this year. Even that may be too early as more public sector agreements come through.

In this respect I am reminded of the last time this happened in February and March 2008.

Credit wobbles had been building all through 2007. Even equity markets were finally taking notice in early 2008.

Bear Stearns was teetering.

Yet the high CPI print of late January 2008 — on the tail of a mining investment boom — saw the RBA hike twice, from 6.75% to 7.25%.

Wage growth did not peak till 2009.

I am not suggesting another GFC looms. The financial system has been massively redesigned since then (US regional banks aside).

But it shows that relying on inflation and wage numbers to set month by month policy can be dangerous, leaving you well behind the current pulse.

Slow start on RBA review recommendations

On a final note, if I was the RBA governor I would be already implementing a number of the RBA review recommendations that don’t need legislation.

For example, I would already be changing the meeting schedule to eight a year, followed by a press conference each time.

This would show an evolving RBA that doesn’t need a big shake-up.

Maybe there’s an explanation why changes haven’t happened yet. Maybe they’re still coming.

It would show an RBA stirred into action, not shaken.

About Tim Hext and Pendal’s Income & Fixed Interest boutique

Tim Hext is a Pendal portfolio manager and head of government bond strategies in our Income and Fixed Interest team.

Tim has extensive experience in banking, financial markets and funding including senior positions with NSW Treasury Corporation (TCorp), Westpac Treasury, Commonwealth Bank of Australia, Deutsche Bank, Bain & Co and Swiss Bank Corporation.

Pendal’s Income and Fixed Interest boutique is one of the most experienced and well-regarded fixed income teams in Australia.

The team won Lonsec’s Active Fixed Income Fund of the Year award in 2021 and Zenith’s Australian Fixed Interest award in 2020.

Find out more about Pendal’s fixed interest strategies here

About Pendal Group

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

In 2023, Pendal became part of Perpetual Limited (ASX:PPT), bringing together two of Australia’s most respected active asset management brands to create a global leader in multi-boutique asset management with autonomous, world-class investment capabilities and a growing leadership position in ESG.

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 May 17, 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