Weekly Market Recap
Week in review
- RBA keeps rates on hold
- Australia housing finance drop 11.6% m/m
- U.S. ISM non-manufacturing index rises to 57.1
- China 2Q Real GDP
- Australia labour market report
- Australia business conditions and consumer confidence
Thought of the week
The price of gold hit its highest level since 2011 last week. A rising number of COVID cases in the U.S., and some other countries, dampened risk sentiment causing a shift to safer assets. However, the rising gold price is not just about insuring against the worst possible outcome as it has been in the past. The message from central banks is that cash rates are not going anywhere soon and benchmark yields will be anchored by bond buying programs. This means real rates are likely to stay in negative territory. As the chart shows, there has been a consistent relationship between falling real rates and a rising gold price. With bond yields at very low levels, duration is an increasingly expensive diversifier in a portfolio making gold a more attractive hedge to risks. This is not to say that bonds have no role in a portfolio but alternative diversifiers are needed.
Gold continues to shine
Gold price ($/oz) and real rates
JPMorgan Global Research Enhanced Index Equity Fund
To achieve a long-term return in excess of the benchmark by investing primarily in a portfolio of companies, globally; the risk characteristics of the portfolio of securities held by the Sub-Fund will resemble the risk characteristics of the portfolio of securities held in the benchmark.