7.3% Yields With Built-In Slowdown Protection: Inside Australia's Credit Market with Yarra Capital

Rob Pizzichetta (Mont Wealth) speaks with Phil Strano (Yarra Capital Management) about the Australian economy, global macro, and portfolio positioning. Strano expects weak but non-recessionary Australian growth, supported by high immigration, with a per-capita recession possible, unemployment trending toward ~5% (potentially 5.5%), and inflation moderating naturally back into the RBA band around 2027. He anticipates the RBA adopts an easing bias by year-end and sees roughly three rate cuts over late this year and next year, though not a return to sub-1% rates. Globally, he cites headwinds from debt, aging demographics, geopolitics, and higher real yields, with AI capex a key tailwind. In credit, Yarra targets investment-grade quality yielding ~6–7.5% (higher income fund ~7.3%), discusses tight spreads amid higher government yields, and uses duration for defensiveness, noting recent drawdowns recovered and outlining multi-sector exposures across public and select private credit.

https://www.yarracm.com/phil-strano-yields-take-centre-stage-again/

00:00 Welcome and Agenda

00:46 Australia Rates Outlook

01:33 Growth Immigration and Jobs

03:35 Inflation Path and Cuts

05:44 Productivity Puzzle

06:32 US Rates and AI Boom

08:10 Global Headwinds Europe

09:39 Credit Yields and Strategy

10:56 Spreads Duration and Defense

16:12 Fund Performance and Exposures

17:43 Risks in Credit Markets

19:32 Wrap Up and Resources