Wall Street's Dow Jones Industrial Average climbed to a fresh record close overnight, supported by a pullback in oil prices and Treasury yields as markets grew more optimistic about a potential resolution to the ongoing Middle East conflict.

Quantum computing stocks were among the standout performers of the session, surging after the U.S. government announced $2 billion in grants allocated across nine companies working in the sector. Rigetti Computing was a notable winner, finishing the day up over 30%, while IonQ gained more than 12% on the back of the same tailwind.

Commentary from Industry Leaders

With private credit remaining front of mind for investors, it's worth stepping back to understand what the term actually encompasses, because it is far from a single asset class.

A new research piece from PGIM makes the case compellingly: the $3 trillion global private credit market spans everything from senior secured first mortgages and infrastructure debt through to mezzanine finance and asset-based finance, each with fundamentally different risk, return, duration and liquidity characteristics. Lumping them together, as much financial media does, risks misreading where stress is concentrated and where genuine resilience sits.

The negative headlines circulating around private credit largely relate to middle market direct lending, which represents only around 30% of the global market. The evergreen and semi-liquid vehicles generating the most concern account for just 5% of total global private credit. Meanwhile, segments like infrastructure debt, commercial real estate credit and corporate private placements continue to perform their intended role, providing stable, income-oriented exposure with strong downside protection.

PGIM notes that commercial real estate credit in particular is now attractively positioned, with lenders able to underwrite against property values that remain around 20% below their prior peak.

Economic News

Australia's jobs figures for April came in well below expectations, with the economy losing 18,600 positions at a time when most economists had forecast growth of around 15,000. The unemployment rate sent mixed signals - it rose on one measure but fell on another, leaving the Reserve Bank watching closely. For now, the expectation is that the RBA will hold interest rates steady in June, giving the economy some breathing room to absorb the impact of three consecutive rate rises and rising energy costs.

But the all-clear hasn't sounded yet. Conflict in the Middle East is keeping oil prices elevated and pushing up the cost of goods, and major supermarkets are already flagging more price increases ahead. The RBA is still banking on these pressures easing soon, an assumption that looks less certain by the week. Most market watchers believe at least one, possibly two, further rate rises are still coming before the end of the year.

For everyday investors, the takeaway is simple: the Australian economy is slowing down, and that slowdown has further to go. Sectors that depend on people spending freely - retail, housing and banking - are likely to face continued pressure as more households feel the squeeze from higher rates and a softer jobs market.

For clients seeking portfolio resilience in this environment, our Foundation Income Model Portfolio is constructed to navigate exactly this kind of late-cycle domestic pressure, with meaningful allocation to private credit and defensive income that is less sensitive to RBA rate decisions and the domestic economic cycle.

Market Snapshot

• Australia: ASX rises on conflict resolution optimism

• United States: Dow 0.6%, S&P 500 0.2%, Nasdaq 0.1%

• Bonds: US 10-year yield at 4.57%, Australian 10-year yield at 4.96%

• Gold: Declined overnight

Key Events Coming Up

• Tuesday 26 May: US CB Consumer Confidence (May)

• Thursday 28 May: US GDP (QoQ) (Q1)

• Tuesday 26 May: US Initial Jobless Claims

Investment Update

We are pleased to present an opportunity to invest alongside the Lederer Group in the 275 Grey Street Fund, providing exposure to 100% ownership of a prime-grade office asset in Brisbane's tightly held South Bank precinct. Forecast distribution yield averaging ~8.0% over the hold period.

The Opportunity

275 Grey Street is a fully leased, institutional-grade office tower located within the South Bank office market.

The asset benefits from:

• 100% occupancy

• A WALE of approx. 8.4 years (office)

• Anchored by ASX200 tenants Flight Centre & Virgin Australia (~85% of income)

• Direct connectivity to public transport infrastructure and established retail and lifestyle amenities

Investment Highlights

Income profile

• 100% occupancy with ~8.4-year WALE (office)

• Long-dated leases with fixed rental increases

• Reversionary upside (subject to market conditions)

• Passing rents estimated below current market levels

• Potential for rental uplift as leases expire and reset

Exposure to Brisbane Office Market

• Benefiting from recent rental growth and demand for prime-grade assets

• Near-city markets supported by limited supply in select locations

Quality Asset Fundamentals

• Prime-grade (2016-built) office building

• Strong tenant covenant with material income concentration

• Integrated transport connectivity and established amenity

Indicative Returns

• Forecast distribution yield averaging ~8.0% over the hold period

• ~15.0% target IRR (post-fees, pre-tax)

• ~1.9x equity multiple over a 5-year hold

If you have any questions, please don't hesitate to get in touch with us today.