Insights

US Treasury (UST) yields traded in a narrow range during the month. Factors such as the second wave of COVID-19 infections in Europe, lingering volatility in US equities and continued lack of consensus on further fiscal support weighed on market sentiment.

October 2020 Second and third waves of the virus will also slow the recovery. But importantly, mortality rates have been lower, suggesting that the world continues to learn to live with the virus without requiring broad lockdowns.

We believe our active approach to credit investing allows us to better serve clients, as indiscriminate waves of downgrades following the turbulence that has rattled global financial markets this year presents us with compelling opportunities.

After three consecutive months of strong gains, Asian stocks finally succumbed to profit taking in September triggered by concerns that the global recovery from the COVID-19 pandemic could be running out of steam.

The Australian bond market (as measured by the Bloomberg AusBond Composite 0+ Yr Index) returned 1.08% over the month.

The S&P/ASX 200 Accumulation Index returned -3.7% during the month. Australian equities lagged most developed markets during the month, as most markets took a breather in September.

Although the coronavirus outbreak has caused major disruptions and geopolitical risk is on the rise, markets are looking forward to recovery. In what appears to be a rapidly changing world, many things remain the same and indeed, may be changing for the better.

The Covid-19 pandemic has accelerated the adoption of internet-based healthcare services. Growing in importance, penetration and acceptance, telemedicine will revolutionise and augment Asia’s healthcare systems.

Yoshihide Suga, Japan’s new prime minister, is widely expected to retain his predecessor’s fiscal and monetary policies known as “Abenomics”.

Clearly, it remains difficult to predict events in this volatile environment, but in the interest of our clients, we do our best and fortunately this time, we had virtually unanimous agreement on a similar scenario as in June, both politically and economically.