The monthly CPI indicator rose 4.9% in the 12 months to July 2023, according to last week’s ABS release. This headline figure was lower than the consensus expectation of a 5.2% increase and reinforced the market’s view that the RBA will almost certainly keep the cash rate on hold at 4.1% when the board meets this Tuesday.

The results of the Australian reporting season reveal a number of upgrade and downgrade themes for listed companies. We document the key themes of reporting season and detail how they are influencing moves in our portfolio.

The global economic recovery from the COVID-19 pandemic is slowing but the recovery is continuing to progress. Global growth should slow further but avoid a global recession, while global inflation should continue to fall.

As we hit the halfway point of reporting season, we have seen a resilient domestic and global economy support FY23 earnings. So far, there have been more beats than misses for FY23, but this positivity has not extended to upgrades for FY24.

After a sharp adjustment in 2022, bond yields have been in a range trading environment since last October. US and Australian long-bond yields are moving closely together, with little current difference in local and US 10-year yields.

The Australian reporting season is underway and the overall mood remains relatively cautious. Although it's premature to offer a definitive assessment of the reporting season, we have spotlighted several critical earnings reports.

Global equities have pushed higher since our June 30 quarterly asset allocation outlook. The global equity market is up a very solid 11% in US$ year-to-date. (14% in A$ terms).

When comparing price to net asset values (NAVs), at face value the A-REIT sector looks cheap. However, this doesn’t capture the whole picture. We believe NAVs are overvalued due to the impending impact of higher bond yields and uncertainty surrounding asset class demand at a sub-sector level.