What happened
Following Fed Chair Kevin Warsh's speech at Jackson Hole, market-implied odds of a September US Federal Reserve rate increase rose above 55%, up from around 40%. Meanwhile, J.P. Morgan Asset Management noted the equal-weight S&P 500 outperformed its market-cap-weighted counterpart by 360 basis points year-to-date.
Why it matters here
Australian investors cannot assume the global central bank rate-hiking cycle is complete. Structural pressure from government borrowing and sticky inflation points to sustained high yields, impacting fixed-income valuations and equity risk premiums globally, including on the ASX.
What to watch
Monitor the upcoming September Federal Open Market Committee rate decision and subsequent yield curve shifts across global short and medium-term government bond markets.
Source
hubbis.com