The sharemarket’s rally comes down to this missing ingredient
There’s a bad moon on the rise: bond yields are climbing and the gigantic US budget deficit is not being addressed in the presidential election, and it needs to be.
Australian equity investors have enjoyed a strong year. Those returns, however, were led by the US sharemarket.
To some extent, the returns reflect the vaunted “Goldilocks” scenario: a resilient US economy in which inflation declines to the extent that the Federal Reserve can make significant rate cuts all without serious disruption to economic growth.
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Stephen Miller is an investment strategy advisor to GSFM and formerly a Treasury officer who served on the personal staff of the then-treasurer Paul Keating from 1985 to 1987.
