Overnight trading saw a clear shift to risk-off positioning as investors reassessed the likelihood of a December rate cut. White House officials warned that key inflation and employment reports may never be released due to data disruptions from the shutdown, creating an unusual level of uncertainty for the Federal Reserve ahead of its final policy decisions this year. 

Michael Burry, the investor who famously bet against the U.S. housing market in 2008 has now deregistered Scion Asset Management, adding to the cautious tone across markets.

The new U.S. government funding bill only extends operations until 30 January 2026, keeping fiscal stability concerns firmly in focus. With these cross-currents in play, equities, gold and Bitcoin traded lower, bond yields pushed higher, and the VIX rose to a near one-month high as investors reduced exposure across risk assets.

Commentary from Industry Leaders

This week's insights come from a note from UBS’ Chief Investment Office that was published on 11/11. UBS identifies several key drivers that are supporting equities in the near to medium term. Firstly, the end of the U.S. federal government shutdown should provide a rebound in delayed government activity, federal employee paybacks, and more normalised data flows, all of which should bolster spending and economic momentum. Secondly, corporate fundamentals remain strong: over 80% of the S&P 500’s market-cap has reported Q3 results, and many companies delivered earnings and guidance that beat historical norms. Thirdly, UBS continues to emphasise the structural tailwind of AI investment, supporting the “transformational innovation” theme across tech, cloud, AI-compute infrastructure, and associated sectors. 

My Key Points: 

Now after seeing what has happened overnight, we can see that markets can shift quite abruptly. Today’s market behaviour underscores an important lesson: volatility can return quickly and what was working (e.g., growth/tech) one quarter can become the source of risk the next. This means we need to be cautious about being overly concentrated in one “winning” theme or asset class (such as tech) and instead look at opportunities across a range of asset classes, growth and value equities, infrastructure and real assets, credit and fixed income, alternative assets and even uncorrelated holdings like physical commodities or crypto (but in measured size). Diversification isn’t just about spreading risk, it’s about capturing opportunities through different market environments.

Economic News 

The optimism from the US government reopening faded quickly, with traders refocusing on hawkish Federal Reserve commentary, delayed economic data, and stretched tech valuations. Major indexes have declined and Bitcoin slid below $100,000, extending its correction to over 20% since early October. With key data missing due to the shutdown, investors grew concerned the Fed may delay a December rate cut, echoing comments from multiple officials calling for caution while inflation remains above target. This triggered a clear rotation out of megacap tech and into more defensive and value-oriented sectors, with institutional desks framing the pullback as healthy after a powerful rally since April.

Key Takeaways

• Post-shutdown optimism has faded; markets are now centred on Fed policy signals and incoming data. 

• Tech and crypto led the declines, reflecting fatigue in crowded high-growth areas.

• Sector rotation is favouring industrials, financials, energy and healthcare.

• Elevated valuations and rising insider selling are adding pressure to tech.

• Expect short-term volatility to stay elevated until the regular flow of economic data returns.

Market Snapshot 

• Australia: The ASX is down following Wall Street's biggest 1 day decline in a month.

• United States: Dow -1.65%, S&P 500 -1.66%, Nasdaq -2.29%. 

• Bonds: US 10-year yield at 4.11% and Australian 10-year yield at 4.42%.  

• Gold: Declined overnight.

Key Events Coming Up

• No major events coming up over the next week

• The Bureau of Labor Statistics (BLS) and other U.S. statistical agencies are working through backlogs after the recent federal government shutdown but have not yet published a full catch-up schedule.

Investment Update

MA Financial is coming out with a new private credit opportunity that will be listed on the ASX and is currently in the middle of a cornerstone raise. The raising is open to wholesale investors only and we have been seeing these raises fill quickly and close early. This latest offer follows the recent Stonepeak note and continues a trend from corporates rolling out a note program as an alternative to bank hybrids. The opportunity is designed to give investors access to a diversified, seasoned portfolio of private credit investments while providing consistent monthly income and embedded downside protection.

Characteristics of the opportunity are below: 

• Exposure to a $2.7 billion private credit portfolio with 94 underlying credit positions and a 7-year track record.

• The portfolio spans 16 lending segments, including asset-backed lending and direct corporate lending.

• Loans are secured, asset-backed, and focused on defensive characteristics with clear portfolio guidelines.

• Managed by MA Financial, an ASX-listed alternative asset manager with $13.3bn AUM.

• Strong alignment: firm and staff have co-invested over $225 million into MA private credit strategies, including >$190m in the underlying portfolio of the proposed Notes.

• Notes would pay monthly interest, receiving income in priority to MA Financial’s Capital Buffer.

• Designed as a fixed-income alternative providing stable, predictable cashflow.

• Each Note is supported by a junior capital buffer (“first-loss piece”) provided by MA Financial.

• The buffer is designed to absorb losses before any impact to Noteholders, enhancing capital preservation.

• Funds deployed into a diversified portfolio spanning:

  • Asset-backed lending

  • Direct corporate lending