Where power lies in markets; tax cuts promised; star's $110m lawsuit
Published: April 13, 2025
Where power lies in markets; tax cuts promised; star's $110m lawsuit
News in brief
Federal Labor and the Liberals held their respective election campaign launches yesterday, with big promises to make purchasing a first home easier, and cuts in taxes pledged by both sides. We are well and truly in the middle of the campaign, although school holidays, Easter and Donald Trump are doing a good job to put people's minds elsewhere. At this point it is the PM's election to lose.
During the past seven days, the preliminary clearance rate for auctions across the country fell to its lowest level this year, on the biggest week of auctions – almost mirroring what’s happening in equity and bond markets. The PCR across the capital cities dived to just under 65pc, compared to 71pc a week earlier, according to CoreLogic.
Over the weekend, Donald Trump walked back punitive tariffs on smartphones and computer chips – meaning Chinese suppliers won’t be hit with 145pc imposts. Apple and other manufacturers had forecast that prices would surge if the costs of inputs were hit by tariffs. Apple’s share price is down 23pc since its December peak.
Prada is set to buy Versace from fashion conglomerate Capri Holdings for US$1.4 billion, salvaging a deal that was at risk of collapsing because of the market upheaval, according to the Wall Street Journal.
Kylian Mbappé has instructed lawyers to sue former club Paris Saint-Germain to recover €55mn the French football star claims he is owed in unpaid wages and bonuses. The dispute stems from Mbappé’s acrimonious 2024 move to Spanish giants Real Madrid, the year after he was temporarily sidelined by PSG. Mbappe claims PSG dropped him from the team after he refused to extend his contract at the club.
Fear-o-meter
The most important financial asset class in the world is US government bonds. In Australia, it is Australian government bonds. They are the foundation of financial markets, providing the closest thing to a risk free rate of return for investors. All other rates of return, in share markets, home loans, credit cards, private equity, infrastructure and everything else flow from government bonds.
Government bonds are much safer than banks because banks are more likely to fail than governments. The reason for that: governments can literally print money.
A bond from the US government is simply an IOU that includes an interest payment. They are issued by Washington to pay for all the spending that occurs, that isn’t covered by revenue such as tax receipts. And there are trillions of dollars of bonds floating around.
What happened last week is frightening. Investors raised concerns about the sanctity of US government bonds. Just the idea of US government bonds being a tiny bit less safe was enough to roil markets and ultimately cause Donald Trump to put a 90-day pause on tariffs.
Bond markets is where the power lies.
Who's talking today?
Ten Cap's Jun Bei Liu is one of Australia's most prominent stockpickers. She joined Sean Aylmer in the studio to share her view of volatility on the ASX, the outlook for the economy, why China's shift in policy matters so much, and why she's watching these stocks:
- Pro Medicus
- Cochlear
- REA
- Treasury Wine Estates
- A2 Milk
It’s Monday the 14th of April and federal Labor and the Liberals launch their respective election campaigns, with first home buyers and tax cuts taking centre stage. The preliminary clearance rate for home auctions tumbles, and Prada is set to buy Versace. Plus Donald Trump starts winding back tariffs, and the 55 million euro lawsuit between a footballer and his club.
Greed-o-meter
| Bank | 3 Year Fixed Rate |
|---|---|
| Australian Mutual Bank | 5.29% |
| NAB | 5.39% |
| ANZ | 5.74% |
| Commonwealth Bank | 5.74% |
| Westpac | 5.99% |
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Reserve Bank Governor Michele Bullock might have hosed down suggestions of a jumbo rate cut when the RBA board meets next month, but that didn't stop National Australia Bank slashing its fixed rate home loans on Friday. This is the current fixed rate offering of the Big Four banks, compared with the best in market right now:
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source: mozo.com.au as at 11 April 2025, leading 3 year fixed rates for each Big 4 provider. Owner occupier, principal & interest home loans at $500,000, 80% LVR