Rising bond yields defined the September quarter. Ten-year government bond yields in Australia and the US ended the quarter at around 5.3%, back at levels last seen before the global financial crisis. Central banks moved from expected rate cuts to renewed tightening, with the RBA lifting the cash rate to 4.60%. Higher yields put pressure on the valuations of equities and property, and they reinforce our focus on avoiding investments where prices have run ahead of fundamentals.

Global equities rose 1.5% in Australian dollar terms, but gains were concentrated in just three sectors: energy, information technology and healthcare. A narrowing like this suggests a market that has become stretched. In Australia, the FY26 reporting season showed how differently companies are being affected. Consumer retailers felt the strain of higher rates and cost-of-living pressures. Technology stocks split sharply between software businesses caught in the AI-driven de-rating and those benefiting from AI infrastructure spending.

Higher yields also bring opportunities. High-quality corporate bonds now offer attractive income, with higher starting yields providing a buffer against short-term volatility. Many A-REITs now trade at significant discounts to the value of the property they own, even though rental growth and occupancy remain resilient. Read the full commentary for our views on each asset class and the changes we have made to the portfolios.

Please contact our team for further information of PPMs service offering at ppm@ppmfunds.com or 02 8256 3777.

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