What was great in May?

Welcome to your June Newsletter

Just about nothing is the short answer! In what was a dramatic month for markets, May started on a positive note for growth assets with the RBA’s unexpected rate cut but this was a short bright spot. More concerns of a "Grexit" (the new acronym for a Greek exit) from the Euro coupled with worries about the Spanish government finances caused markets to dramatically take risk off the table. The negativity was compounded by the disappointing Purchasing Managers Index report for China, with the very weak employment data in the US also raising fears of a global slowdown. With the result of the election result in Greece No immediate Greek exit from the Eurozone is likely although the austerity package may well be negotiated to some degree. Europe is not solved, with contagion still a risk and Spain and Italy ready to re-ignite investor anxiety. We believe volatility is the most likely outcome for the coming months rather than either a solution or a Euro collapse.

Our 10 year bonds plunged to under 3.00% (it got down to 2.71% and is now trading at 3.01%), reaching levels lower than in the depths of the GFC, and all growth assets were crunched. The RBA responded with another 0.25% cut bringing our official cash rate down to 3.5%. Our Fixed Interest Team expects another 0.50% of cuts by the end of the year, with the market currently pricing in around 1.00% cuts over the same period.   
Currently markets have recovered somewhat with US equities up for 5 days in a row, China cutting interest rates by 0.25% and a very positive read on our GDP number.

That was May

This month is June. Winter begins, Queen’s birthday, start of the Ski season, end of financial year and halfway through 2012 already. This month we look at Trauma cover? Do you have enough? We also look at your home loan which is the best for you? Superannuation contribution levels have changed in the recent budget and we also discuss how to get your health rebate.
 
Happy End of Financial Year