Access our news and insights

Sign up to receive our regular newsletter with insights, portfolio and event updates delivered straight to your inbox.

Lonsec   ⟩   News & Insights   ⟩   Insights   ⟩   Will the RBA dig into its toolkit?
Lukasz de Pourbaix

AuthorLukasz de Pourbaix

TitleChief Investment Officer, Lonsec Investment Solutions

DateJune 27, 2019



It’s been an eventful month for markets. The Coalition’s Federal election win, the RBA’s rate cuts and a continuation of the US-China trade tensions have all impacted markets during the month of June. Domestic markets reacted positively to the Coalition win with some of the pessimism surrounding the housing market subsiding. The RBA’s rate cut was not unexpected with most analysts having already priced in the cut and potentially another.

Interestingly, the market narrative has turned to the possibility of the RBA undertaking a quantitative easing (QE) program domestically in a similar fashion to what we have seen in Europe and the US, whereby the RBA would buy government and corporate bonds using cash on its balance sheet. This would result in effectively flooding the market with liquidity while keeping rates low. Should rates continue their downward trajectory and QE become a reality, it may force investors into equities providing a tailwind for markets, as we have seen in Europe and the US in recent years. This is particularly relevant for retirees who may be forced into increasing their exposure to Australian equities as a source of income. The trade tensions between the US and China continue to adversely impact markets contributing to bouts of volatility. The longer the ‘trade wars’ the higher the probability that we will see longer-term impact on global growth.

These factors make it a challenging period for investors where factors other than market fundamentals are having a material impact in the trajectory of markets. In such an environment, we believe selective valuation opportunities will present themselves for long-term investors, however ensuring that your portfolio is diversified will be very important in navigating an increasingly volatile market environment.

Want to find out more?

Get in touch to find out how we can help you start implementing managed portfolio solutions for your clients. Call us on 1300 826 395 or email

Related stories

21 Jun 2019 - The possibility of the RBA undertaking a quantitative easing program could have major ramifications for retirees, who may be forced to increase their ...

Should retirees fear an RBA quantitative easing program?

By Lukasz de Pourbaix Read now

23 May 2019 - When you ask clients how they think about risk in retirement, you are unlikely to get a textbook response. Instead, you’ll probably get a list of their ...

Most retirees can’t define risk, but they know it when they see it

By Veronica Klaus Read now

27 Mar 2019 - In recent years valuations across most asset classes have been sitting in the expensive range. Strong tailwinds from central banks in the form of low ...

Are pockets of value appearing in the market?

By Lukasz de Pourbaix Read now