With inflation falling faster, investors need to grab yield
Lower petrol prices, lower electricity and gas prices, a rising Australian dollar and zero inflation in China all point to a rapid decline in inflation in Australia.
In the final quarter of 2023, investment markets recovered quickly as it became obvious that the risks of either a US recession or the continuance of high inflation were overstated. In particular, a notable surge in both US oil and LNG production helped push energy prices lower and pushed US “cost push” inflation lower.
Forward interest rates in the US and across the world, measured by bond yields, rallied hard. This is important for self-directed investors to understand and note because they need to add high-quality yields to their portfolios before they disappear with lower inflation readings.
