FIIG Securities head of research Philip Brown suggests the Australian economy may be heading towards an interest rate rise, presenting both opportunities and risks for investors. Brown noted that the market is already pricing in just under two cash rate rises, a level he considers potentially excessive. He warns that if the Reserve Bank of Australia increases rates while other countries are cutting, the impact of each rate rise on the Australian economy will be amplified, potentially requiring fewer increases overall.
Brown suggests that the market’s current pricing may already reflect the full extent of the anticipated moves, making it an opportune time to increase allocation to fixed income assets. He pointed to attractive yields in longer-term bonds, specifically mentioning the Transgrid Aug-35 callable bond and the Aurizon Sep-40 bullet bond. Additionally, he noted the increasing appeal of floating rate notes in the current environment. FIIG Securities is a fixed income specialist, offering investors access to a wide range of bonds and fixed income investments. The firm provides research and advice to help investors navigate the complexities of the fixed income market.
FIIG Securities has developed a 2026 strategy named RISE, which aims to capitalise on the benefits of potential rate rises while simultaneously mitigating associated risks. According to Brown, if the RBA resorts to raising rates to create economic space for necessary investment, the resulting economic environment may not feel positive, particularly given the uneven impact on different households.
Brown’s analysis underscores the importance of strategic asset allocation in the face of potential interest rate adjustments. He encourages investors to consider fixed income opportunities and strategies like RISE to navigate the evolving economic landscape effectively.
