Daintree urges advisers to look past RBA decisions

Binaya Dahal

Editorial Intern, Financial Newswire

3 March 2026

Australian advisers should worry less about local interest rate decisions and instead focus on building portfolios that harvest carry efficiently while preserving flexibility for shifting global conditions, fixed income boutique Daintree Capital says.

In a briefing in Sydney this week, the manager’s founding partner Justin Tyler said the market’s obsession over how much the rate may increase by and when the next easing cycle will begin risks missing the bigger shift underway in credit markets.

“For credit investors, the rate debate is a distraction. The real issue is whether portfolios are positioned for a structurally different US rate regime,” he said.

Tyler said US monetary policy was now effectively binary on employment outcomes and is at risk of the Federal Reserve moving quickly if labour markets deteriorate meaningfully.

He pointed to a growing divergence in the United States between business investment and jobs growth, a pattern historically associated with recessions.

On the Reserve Bank of Australia (RBA), Tyler said its hawkish tone reflects credibility concerns after inflation spent years outside the target range.

However, he believes the underlying inflation trend is less concerning than the headline numbers suggest.

“Strip out administered prices and market-sector inflation is much closer to target,” Tyler said.

Tyler further noted that fiscal transfers supporting household incomes have rolled off sharply, while wage growth has been running ahead of corporate sales, a dynamic he believes is unlikely to persist.

In this environment, Tyler argues the case for materially more restrictive policy in Australia was weak, even though the labour market remains strong.

“The labour market is resilient, but vacancies have room to fall. As they do, markets will become less sanguine. The hiking cycle may be closer to its effective peak than markets assume,” he said.

Furthermore, Tyler said he rejects the idea that tight spreads alone justify either de-risking or stretching for yield given that credit spreads are about 40 basis points below long-term averages.

“Spreads are tight because fundamentals are stable. In short-dated, high-quality credit, default risk remains low outside systemic shocks,” he said.

“The bigger risk isn’t tight spreads — it’s abandoning underwriting discipline to chase incremental yield.”