In February, Australian bond yields continued to rally following the release of mixed economic data, which has prompted a shift in leading economist expectations to an RBA easing bias over the course of the year. In the US, despite an increasingly cautious statement from the US Federal Reserve on its outlook for US growth, there was increasing optimism over a trade resolution with China following President Trump’s decision to postpone an increase in tariffs citing ‘substantial progress’ in discussions.
In January, defensive sectors continued to benefit from the increased global caution that saw the US Federal Reserve soften its global growth expectations. Bond yields in the US and domestically declined by -6bpts and -8bpts respectively as a result. In the UK, Prime Minister Theresa May’s Brexit plan was overwhelmingly rejected by the UK parliament which further fuelled equity market volatility and global growth concerns. Domestically, the focus continues to centre around the housing market with dwelling prices continuing to fall nationally due to a tightening of the lending criteria.
Until recently, retail assets have been highly sort after by listed and unlisted property owners, attracted to the highly defensive and predictable cashflows that retail property has typically delivered. But this is now changing and there are suggestions unlisted super funds are looking to down weight their exposure to retail property. In addition, several listed REITs such as Vicinity, Stockland and GPT Group are selling assets with varying degrees of success.