The New Normal – is this another illusion?

I thought it would be relevant to share my thoughts about this concept that I keep hearing over and over from Fund Managers ( especially in the Fixed Income markets ) that we have entered a “New Age” of lower rates for longer. My experience in the past is that every cycle brings about this paradigm shift of a new normal being created and this then takes on a life of its own as more and more people hear about it, see it being endorsed by experts and then having the media “confirm its very existence”!

The issue I have is that I have never experienced a sustainable “New Normal” ever actually play out in these cases, and I’m pretty sure that is why all languages have the word “Normal” in them in the first place. Human nature being what it is makes me believe that most economic cycles will always revert to “normal”, and that it won’t be any different in this cycle.

I agree that the key factors behind the lower-for-longer scenario in Australia is down to the shift away from mining investment, ongoing weak growth and the need for lower policy rates and a lower Australian dollar to accommodate the rebalancing of the economy. As a result, it would seem “very unlikely” that the Reserve Bank of Australia (RBA) will hike rates any time soon.

I think the Financial Markets are trying to “talk their own book” to continue to make easy money in a QE environment and use the media to try to force the Fed to hold off the rate raising cycle in the US ( which affects markets globally ). As I have told our clients this year, I cannot see why the Fed won’t start raising rates at the September meeting as the domestic US economic indicators point to this being a prudent course of action, notwithstanding the recent turmoil in global equity markes caused by the Chinese devaluation of the RMB and a general increase in volatility. Anyway, we will find out soon enough, and if this doesn’t occur, it is simply delaying the inevitable and we will continue to speculate about the October meeting outcome.

The key take away from this is that once the Fed started raising rates, it will put pressure on bond yields globally, including Australia which will increase the cost of borrowing, perhaps initially in the larger corporate sector, but this will then filter down the food chain and so I think it is an opportune time to look at fixing some personal debt that is being used for investment purposes, and I would look at a 5 year duration as I think rates will normalise and that the “new normal in interest rates” will just be something we remember in the future as being a fundamentally unsustainable figment of the popular imagination.

I hope you find this interesting reading and that it helps you make better informed decisions.

Related Articles


Standard Life Investments believes that while the “self-sustaining” economic recovery in the US will soon drive interest rates higher there, the Reserve Bank of Australia is unlikely to raise rates any time soon.

Standard Life Investments believes that while the “self-sustaining” economic recovery in the US will soon drive interest rates higher there, the Reserve Bank of Australia is unlikely to raise rates any time soon.

Sebastian Mackay, Standard Life Investments investment director and joint portfolio manager of the Absolute Return Global Bond Strategy, shared his thoughts last week with MortgageBusiness’s sister publication InvestorDaily.

According to Mr Mackay, Standard Life Investments’ central scenario is one of a weak global recovery rather than deflation, although he concedes a deflationary scenario is “not that unlikely”.

Read more

Hot property: most expensive suburbs revealed

CoreLogic RP Data has revealed the suburbs with the highest median value around the country, with Sydney suburbs dominating the list.

The top five most expensive suburbs are in Sydney, which has 17 of the 20 listings.

Point Piper came in at number one ($5,596,397), followed by Centennial Park ($5,199,324), Vaucluse ($4,125,216), Bellevue Hill ($3,810,420) and Tamarama ($3,534,024) rounding out the top five.

Read more


The Reserve Bank’s two-pronged monetary easing measures look to have come to an end but our central bankers will remain watchful of the currency, according to Goldman Sachs Asset Management executive director and global fixed income portfolio manager Sean Reynolds.

Read more

post sept 2015-10-01 at 8.36.53 pm


Australia has again placed first in an international ranking of sustainability in real estate.

For the fifth year running, the region of Australia and New Zealand topped the annual survey, which is conducted by GRESB, a Dutch-based industry group.

Property companies in Australia and New Zealand achieved an average score of 69, which was well ahead of the other regions.

Read more


By CommSec

Reserve Bank Board minutes: weekly consumer confidence; car sales

  • Consumer sentiment: the weekly ANZ/Roy Morgan consumer confidence rating rose by 0.6% last week to stand 0.6% higher than a year ago.
  • New vehicle sales: sales fell by 1.3% in July but were still up 3.7% on a year ago. The annual total of new vehicle sales hit a 19-month high and is 0.6% below record highs.
  • Reserve Bank Board minutes: Board members noted that the shift in the resources sector from investment to production “was being assisted by the depreciation of the exchange rate over recent months”.

What does it all mean?

Consumer confidence is stuck in a groove at present. That is far from negative as the current confidence reading is above both short and longer-term averages. Factors like the Aussie dollar, petrol prices, home prices and share market fluctuations will be important in driving confidence in the future together with political influences. The greatest threat to consumer confidence is the negativity of major political parties.

Read more

Instagram Posts

🏗️ Exciting Construction Update on Dawn’s Progress!

🏡 Quality Craftsmanship:
Dawn’s fit-out showcases excellence in every detail. Our video highlights the remarkable progress of this apartment, emphasising the commitment to quality craftsmanship and thoughtful design. From foundation to finishing touches, no compromises have been made in creating a home that exceeds expectations.

🌴 Coastal Living at Its Finest:
Situated in idyllic Mermaid Beach, Dawn offers a lifestyle many dream of. Residents will have the privilege of enjoying the beach, golden sands, refreshing surf, and invigorating coastal walks right at their doorstep. Embrace the serenity and beauty of coastal living.

🛍️ Conveniently Located:
Mermaid Beach is a vibrant community with a wealth of amenities and attractions. Dawn is thoughtfully positioned near an array of dining, shopping, and entertainment options. From trendy cafes to world-class restaurants, Pacific Fair Shopping Centre to The Star Gold Coast, everything you need is within reach.

🪴 Thoughtful Design:
Dawn has been carefully designed to create a space that harmonizes luxury and comfort. The video showcases the sleek and modern kitchen, spacious living areas, and seamless indoor-outdoor flow. A testament to mosaics commitment in providing an elegant and inviting living experience.

🏊 Resort-Style Amenities:
Dawn will offer residents access to resort-style amenities, including a sparkling swimming pool, fully equipped fitness center, and beautifully landscaped gardens. These facilities enhance your lifestyle, offering relaxation, rejuvenation, and community connection.

🔨 Progressing Well:
Dawn is progressing beautifully, thanks to our dedicated team. Every aspect of this property meets the highest standards. In the video, witness the care and expertise that goes into bringing this exceptional home to life.

📞 Stay Updated:
To stay informed about the latest updates on Dawn, reach out to us. We will provide any information you need and keep you in the loop as this remarkable property nears completion.

#australia #coastalliving #Dawn #quality #queensland #brisbane #mermaidbeach #dreamhome #new

3 1

Every little action makes a difference ✨ ...

5 3

Slow and steady wins the race.. what are your goals ? ⚡️

#transformation #inspiration #enjoy #winner #success #growth #fun #challenge #grind #strength #mindset #goals #ambition #goals #propertygoals

3 2

Persevere in the face of challenges.⁠
But, never lose sight of the ultimate goal 🏆️

2 2

Enjoy meal times with the serenity of riverfront living 🍃 ...

6 3

Make the most of what you got!⚡️⁠

2 2

Taking risks is an unavoidable component of business success, so it is wise to embrace that idea.⁠

However, if you can get past the fear of taking the risk, many benefits can await you on the other side⚡️

4 2

Each Day is a gift to start fresh! 🌅⁠

5 1

What`s your plan? 💫 ...

3 1

There is nothing like a cozy living space with open-plan living.. not to mention the generous balconies with the most amazing expansive views over Brisbane ✨⁠

The WFH potential provided by the superb infrastructure and lifestyle attributes of South East Queensland is being sought after by an increasing number of interstate arrivals. ✈️⁠


5 1

As they say, slow and steady wins the race! 😎 ...

2 1

Enjoying the Brisbane skyline!⁠ ⁠


4 1

What do you miss about coming home after travelling? ✈️ ...

2 3

Just another day in sunny Brisbane 💫 ...

2 1