Staying focused amidst market uncertainty
As we enter the final quarter of FY2025, markets remain challenged by global uncertainty, persistent inflation pressures, and shifts in monetary policy expectations. While volatility continues to shape the investment landscape, Australia’s economy has shown signs of resilience, supported by robust employment, strong migration, and stable consumer spending. In this environment, income-focused strategies remain a valuable tool for diversification and stability.
The global economic landscape has been marked by heightened volatility in recent months, largely due to the ongoing trade conflict between the United States and China. After President Trump's 'Liberation Day' announcement and the imposition of tariffs, both countries have taken further steps that continue to weigh on global markets. While the trade situation has calmed somewhat, uncertainty remains high, and the impact on growth is still unfolding.
In the U.S.,
economic growth has shown signs of slowing, with consumer spending weaker than expected. The Federal Reserve has kept interest rates steady, signalling a cautious approach amid rising inflation expectations and economic uncertainty. Despite the resilience of the U.S. economy, there are growing concerns about the risks of stagnation or even recession, with trade disruptions and softer domestic demand putting pressure on growth.
China, on the other hand, is implementing measures to support its economy in the face of ongoing trade tensions. Although the trade conflict remains unresolved, China's authorities are aiming to meet their 5% growth target for 2025, which would provide some stability to the global market. However, the broader impact of the trade war and the slowdown in global demand continue to present challenges.
In Europe, the economic recovery has been stronger than expected at the start of the year, driven by industrial production and exports. However, the region faces risks from ongoing trade disruptions, which could dampen growth in the coming months. The UK, benefiting from a recent trade deal with the U.S., may see some stability, although uncertainties remain.
Across Asia, economies are shifting their focus towards domestic demand as trade disruptions take their toll. Central banks have eased monetary policy to support growth, with further rate cuts expected in response to slowing global conditions.
Global commodity markets have also experienced significant volatility, with prices for oil and iron ore falling, while gold has seen a rally. These fluctuations reflect the broader uncertainty in the global economy, driven by trade tensions and shifting economic policies.
In summary, while markets have calmed from the extreme volatility of earlier in the year, global economic risks remain elevated, with trade tensions and inflation concerns continuing to shape the outlook for the rest of 2025.
Australia’s economic recovery is progressing, though more slowly than anticipated. Growth is now forecast to lift to 1.9% over 2025, revised down from 2.2%, as households remain cautious and domestic demand stays weak.
Despite earlier tax relief and some easing in cost-of-living pressures, consumer spending has been restrained. Retail sales and broader consumption indicators showed little movement in the March quarter, and this is expected to continue given lingering global uncertainty and slower population growth. Employment growth has also eased, pointing to softer labour market conditions.
Australia’s trade sector has provided some support, with goods exports rising in the March quarter—mainly due to a sharp increase in gold exports. While this may not be sustained, it has helped to partially offset domestic weakness and supports the outlook for modest GDP growth through the first half of the year.
Inflation has continued to slow, now sitting comfortably within the RBA’s 2–3% target range for the first time in several years. Combined with weaker labour market outcomes, this has increased the likelihood of further interest rate cuts.
Following the April cut to 4.10%, markets expect the RBA to ease policy further this year, with up to 75 basis points of cuts priced in. The May Statement on Monetary Policy will be closely watched for any shifts in the Bank’s view on household demand, employment trends, and productivity challenges.
Looking ahead, much will depend on the global backdrop. A stronger-than-expected recovery in China could boost commodity exports and the dollar, while a weaker global environment may see the RBA keep policy settings supportive into 2026.
At Skyring, the preservation of our investors' capital is at the heart of our investment philosophy. In the current market environment, where volatility remains a key theme, many investors are seeking income-focused strategies to diversify their portfolios.
We remain committed to offering investment opportunities designed to deliver regular income, while prioritising capital preservation and disciplined risk management. Our comprehensive processes and policies are specifically crafted to provide our investors with the confidence that we will meet their income and investment needs with the utmost care and consideration#.
As of May 2025, the Skyring Fixed Income Fund offers an indicative distribution rate of 8.30% per annum^. This fund delivers reliable income while managing risk, even during times of market uncertainty.
The
Skyring Platinum Fixed Income Fund is targeting an indicative distribution rate of 8.25% per annum^. This fund seeks to generate enhanced returns while maintaining a disciplined and transparent approach to risk management.
At Skyring, we are dedicated to providing transparent investment opportunities and building a portfolio that is designed to meet your long-term income and investment objectives.
At Skyring, we are a boutique non-bank Australian income manager directly accountable to our investors. Our primary goal is to provide regular income solutions that support the ongoing success of your portfolio.
Through our Skyring Fixed Income Fund and
Skyring Platinum Fixed Income Fund, investors can start with a minimum investment of $1,000, with distributions paid monthly.
Our funds are suitable for a variety of investors, including individuals, companies, self-managed super funds (SMSFs), and trusts. We pride ourselves on transparency, with no entry or exit fees, and a straightforward online application process that can be completed in approximately ten minutes.
To explore how Skyring can assist you in achieving your income investment objectives, our friendly Investor Relations Team is available to discuss any queries on 1300 73 72 74.
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Sources:
U.S. Federal Reserve, U.S. Bureau of Labor Statistics (BLS), Australian Bureau of Statistics (ABS), Reserve Bank of Australia (RBA), Westpac Economics, Bloomberg, Reuters, Financial Times, The Australian, ABC News, International Monetary Fund (IMF), World Bank, Trading Economics, S&P/ASX 200, CNBC, Forbes, News.com.au
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