A FinSec View – Market Updates, Family Trusts, Mortgage rate waves, Funding Xmas & more….

Over the past four weeks, three key events unfolded: an unexpectedly high CPI and the Reserve Bank’s decision to hold off on easing and an unexpected drop in the unemployment rate.

Australia’s stubborn inflation contrasts with global easing, creating challenges for rate-sensitive stocks. The Q3 2025 Consumer Price Index increased to 3.2%, surpassing the market consensus of 3.0%, driven by higher costs in fuel, electricity, housing, and services. The RBA’s preferred measure, the Trimmed Mean CPI, rose to 3.0%, comfortably exceeding the 2.7% forecast. On November 4, the RBA kept rates steady at 3.60%, citing inflation as ‘materially higher than expected.’ They expect underlying inflation to stay above 3% in the coming quarters, meaning rate cuts are delayed until early or mid-2026. Markets are now largely discounting rate cuts this year, with less appetite for cuts in 2026, and the RBA remains cautious. This week’s drop in unemployment affirmed their decision to hold. The ASX has been volatile, now more than 5% below its October highs.

The CPI shock and subsequent RBA hold had an immediate, expected impact on sector rotation:

• Financials experienced mixed results, with the banking sector initially supporting the index strongly, but the delayed prospect of further monetary easing dampened overall sentiment.
• Interest-rate-sensitive sectors such as property and consumer goods continued to face pressure.
• Healthcare declined, led by CSL’s profit downgrade and restructuring concerns.
• Market leadership continued to diversify, with small and mid-cap stocks outperforming large-cap stocks in October and over the year.
• Gold miners maintained their strong performance from earlier in October, as record-high gold prices (peaking above $4,300 per ounce). This international safe-haven demand remains a key tailwind for local producers.

The AUD has risen slightly since mid-October, trading near US$0.6524 in early November. The main support came from divergent monetary policy—while the RBA is now effectively on hold, the US Fed has continued easing. This difference in interest rate outlook has made the AUD more attractive.

The ANZ-Roy Morgan Consumer Confidence Index spiked to its highest level since 2022 November, suggesting that the cost of living is easing but making it even harder for the RBA to ease.

The Australian market faces its tightest recovery conditions in over 40 years, as the RBA’s Deputy Governor notes. Strong demand and limited capacity hinder the full suppression of inflationary pressures. For investors, the approach remains highly selective, favouring global-linked safe havens over domestic cyclical sectors that need easier credit conditions to thrive. The market will monitor upcoming CPI and employment data very closely to assess if local inflation continues.

The back half of October saw a classic ‘risk-on’ rally, ignoring fears of an imminent escalation in the global trade war. The key factor was a sudden, strategic détente between the US and China, which immediately boosted optimism across major indices. The story has shifted from “trade war fear” to “unleashed tech growth” and “global monetary easing,” driving the S&P 500 and the Dow to record highs. However the fortnight has seen markets digest the likelihood that rate cuts may not be coming as fast or as often as they had hoped and subsequently retraced most of the gains.

US Markets: TACO trade pays off

The core driver of global sentiment was the eleventh-hour resolution (or, rather, postponement) of the US-China trade escalation. Washington agreed to pause the implementation of new tariffs and halt plans for the threatened 100%+ tariff on Chinese exports for another year. China suspended its retaliatory tariffs, agreed to resume major purchases of US agricultural goods (like soybeans), and granted general licenses for rare earth exports to US end-users. This immediate de-escalation confirmed the market’s long-held “TACO Trade” thesis (Trump Always Chickens Out). Following the trade truce, the US market soared. The Dow Jones and the S&P 500 quickly erased mid-October’s losses and rocketed to new all-time highs. The rally was primarily led by the tech-heavy NASDAQ, which saw a powerful resurgence in AI mega-cap stocks. Companies like Nvidia and AMD, highly sensitive to US-China chip policy, rebounded sharply, confirming that the structural AI growth story remains the market’s most potent bullish factor.

EU: European and UK Markets: riding the coattails

European equity markets remained positive, driven by reduced global risk, lower energy prices, and ongoing domestic easing. The UK’s FTSE 100 hit a record high (~9,715), aided by a softer Sterling and a strong resource sector. The STOXX 600 also performed well, supported by improving global trade outlooks. Although the Bank of England and ECB held rates in November, expectations of further cuts continue to support valuations.

Asia & Emerging Markets: Nikkei takes flight

Japan’s Nikkei index surged 16.6% in October to a record high, driven by strong tech momentum, a weaker Yen boosting exports, and investor confidence in the new Prime Minister’s Abenomics-style policies. South Korea and Taiwan indices also gained significantly, aided by a trade reprieve that supports their semiconductor supply chains and sparks a regional chipmaker rally. With the US Fed easing and a softening dollar, capital flows to emerging markets remain strong, as many EM central banks continue easing, bolstering currencies and debt. Overall, the global outlook has shifted to bullish, with trade-war risk gone, enabling a focus on tech-driven earnings growth and ongoing monetary easing.

Sticky inflation and fewer rate cuts remain the only tempting factor for the bulls.

Fasten your seatbelt, we’re driving headfirst into a new economic era

The global economy has entered a new era, fundamentally different from the relative calm of the period between the mid-80s and the GFC, known as the “Great Moderation.”

In a recent think piece by Commonwealth Bank chief economist Luke Yeaman, this structural shift is described as a fundamental breakdown of trust among major world powers, where economic security now outweighs economic efficiency. This strategic rivalry, exemplified by the US and China, has revived industrial policy, sanctions, and trade restrictions, reversing decades of globalisation and macroeconomic stability.

Yeaman says that economic institutions have turned into battlegrounds for influence, and trade is being weaponised, in his recent, quite ominous warning for investors.

Four powerful, interconnected transitions are shaping this new reality. The leading force is Geopolitics, pushing countries to quickly rebuild sovereign manufacturing capacity (a COVID-19 lesson) and boost defence expenditure. Adding to this are three other significant shifts: the extensive, complex move to Net Zero, which demands annual clean-energy investments to reach into the trillions; the rise of AI and new technologies, promising a major boost in productivity but also risking a split in critical markets; and challenging Demographics, as populations in major economies like China and much of the G7 are aging and declining, putting pressure on fiscal budgets and long-term growth potential.

The combination of these forces suggests a global economy marked by increased volatility. Globalisation is retreating, leading to more trade barriers and regulations, decreased efficiency, higher prices, and ultimately lower real incomes. Importantly, this period will demand a significant boost in investment in defence, green infrastructure, and supply chain resilience—alongside structural pressures on public debt caused by ageing populations, which are expected to alter the savings and investment balance and push neutral interest rates higher.

While the outlook indicates a more perilous, uncertain world amid rising structural inflation pressures, there is a clear silver lining, says Yeaman.

The twin forces of AI and the Net Zero transition could be a major boost to productivity. If effectively used, AI and innovation driven by climate goals could lead to a surge in productivity that helps counteract the negative effects of deglobalisation and rising costs. However, while technology can address many economic problems, it cannot fix the core issue of declining global trust, which will keep fuelling geopolitical tensions and instability.

What is happening is a lasting shift, Yeaman says, warning investors they are probably mistaken to overlook it. “This is a deep structural change, not a temporary Trump phenomenon — as some would like to think. Investors shouldn’t lose sight of the fact that there is a far bigger game at play here that goes well beyond a standard trade negotiation. This is a long fight for strategic power; it is not primarily about short-term economics.”

You can read his full piece here.

Multi-million-dollar mistake shines spotlight on family trusts

Adelaide-based rich-listers, the Thomas family, are having an interesting November.

Not only are they part-owners of Melbourne Cup winner Half Yours, but they are engaged in a court battle with the ATO to safeguard their $3 billion wealth and recover a $13 million tax bill due to an accounting mistake, in a case being closely watched by tax specialists and anyone with a family trust.

The Federal Court in Adelaide began hearing the Thomas family case this week; the family are the founder and owner of the hugely successful seafood and meat processing company, Thomas Foods International.

The details are complex: essentially, the family’s tax advisers made a crucial family trust election error by naming third-generation Chloe Thomas, 22, as the head of the family group for two family trusts. According to court documents, the accountant did not realise that her grandfather and company founder, Chris Thomas, had previously been named as the head of the family group for one of the trusts until the ATO alerted the firm in 2021.

The outcome was that each trust had a different test individual, resulting in a family trust distributions tax (FTDT) bill of $13.2 million after funds transferred from one trust to another.

A family trust election designates one family member as the test individual around whom the family group is formed for tax purposes. Money can then be distributed to other members of that test individual’s family group without incurring FTDT. Attempts to amend one of the Thomas family trust elections with the ATO to align both trusts under the same test individual were unsuccessful. The family is now seeking a court ruling to rectify the mistake, in what could become a precedent-setting case.

Australian tax specialists say the law is so complex that mistakes involving family trusts can be common, and the implications for rectification are of enormous public interest. Family trust election rules and FTDT were introduced in the late 1990s to ensure tax benefits are confined to a trust’s designated family group, but accountants and lawyers say the mechanism is no longer fit for purpose or able to adapt to intergenerational change.

If the Thomas family prevails, the case could set a precedent that helps families that own private businesses of all sizes, through family trusts, avoid tax liabilities arising from similar mistakes.

Tax specialists are calling on the government to intervene by simplifying the law, giving the ATO discretion to excuse historic and current mistakes, and making it easier for family trusts to vary or revoke family trust elections.

Despite the growing attention from the ATO and their complexity, discretionary trusts remain a valuable vehicle when managed carefully and with adequate investment in their administration, while proper advice and attention are necessary at each stage of your trust’s lifecycle.

Stats Interesting

That’s the number of first-home buyer guarantees issued in October under the Federal Government’ s latest intervention in the property market – its expanded 5% deposit loan scheme, which only came into effect on October 1.

It’s also a 48% increase on the 3901 guarantees issued in October 2024 under the old scheme. The expanded 5% scheme is meant to be a gesture of fairness and equity, aiming to bridge the wealth gap in Australia by allowing those without access to a ‘bank of mum and dad’ a chance to get into the property market.

Its aim is to promote home ownership by removing income limits for eligible first homebuyers, raising property price caps across Australia, and offering unlimited government-backed guarantees by eliminating the need for Lenders Mortgage Insurance. Single parents can qualify with only a 2% deposit. 

It couldn’t be more badly timed, critics argue, as affordability hits a new low. House values reached a record average of $858,000 across Australia in October 2025, with October experiencing the fastest monthly increase (1.1%) since mid-2023. 

Historically, the government tends to step in when the market is at its peak, giving the false impression of assistance that has been shown to drive up prices.

Instead of tackling the core issues of chronic undersupply, tax distortions, and planning delays for shovel-ready land, the scheme merely adds more buyers to a limited supply market, causing prices to rise and pushing the dream of homeownership further out of reach for those not in the market. 

According to market analysts, Anthony Albanese’s intervention coincides with the anticipated peak of the 18-year property cycle (the last major peak was in 2008; the next is expected in 2026), increasing the likelihood and magnitude of the upcoming market correction. It has been compared to Kevin Rudd’s 2008 boost to first-homeowner grants, which helped drive median property prices up by tens of thousands of dollars, effectively erasing its benefits and leaving many buyers with overvalued assets and higher debt once the stimulus concluded.

Paradoxically, in recent months, there has been a surge in investor activity in the sub-$1 million price range, as investors hurried to buy properties before the influx of new owner-occupiers entered the market after October 1. This led to rapid price rises (5-7% in some areas) and fierce competition for quality properties.

Investor loan growth rose to 7.3% annually, the quickest since 2015, driven by three RBA interest rate cuts this year, immigration-fuelled population increase, and a significant housing supply shortage.

The Reserve Bank and financial regulators are closely watching the surge in debt and price volatility. RBA Governor Michele Bullock has warned that there may be no more interest rate cuts this easing cycle due to stubborn inflation, which may temper speculative investor sentiment.

The banking regulator, APRA, is watching a rise in investor activity. It has warned banks to be prepared to use macroprudential tools, such as limits on high-debt-to-income or investor loans, if “risky lending” or a decline in the housing cycle continues.

For the 5% deposit buyers, who are already financially stretched, the risks are high. Any market correction or price decline could quickly wipe out their entire equity, leaving them in negative equity (owing more than the property is worth), as happened after Rudd’s intervention, or facing serious repayment pressure if interest rates rise again.

Riding the Mortgage Wave

The last of the five-year, fixed-rate loans secured in the COVID era are starting to mature, leaving households with a nasty Christmas present or cancelling the ‘happy’ in their new year.

Dubbed the mortgage “wave” or “cliff”, this phenomenon refers to a huge number of Australians who experience a sharp increase in monthly repayments, with many facing potential rises of more than $1000 a month.

Hundreds of thousands of Australian households took advantage of historically low interest rates of 1.90% to 3% during the pandemic, with many locking in fixed rates for five years.

These loans are now coming to an end and will revert to significantly higher variable or new fixed rates of 5% to 7% or higher, depending on the lender.

While most borrowers would be aware of the looming hit to their household budgets, many remain unprepared for the added strain on households already coping with the cost-of-living crisis.

If you’re one of those households, you should definitely seek expert lending advice to consider your refinancing options instead of just automatically fixing again. FinSec partner Anthony Hughes is on hand to guide you through your options.

67 remains our official age of retirement

The Australian Government has confirmed there are no current plans to increase the age from 67 at which Australians can access the Age Pension, which is the criteria most commonly used to define our official retirement.

A few weeks ago, Australian social media and online Google searches were flooded with fake news sites claiming, “goodbye to retirement at 67”. A statement issued by the Department of Social Services (DSS) confirmed there was absolutely no truth to these articles.

While there is actually no set retirement age in Australia, there are two important ages to consider when planning for retirement: the superannuation preservation age and the Age Pension age.

Age Pension eligibility – this is when you are eligible to receive a payment from the Commonwealth, although you still have to pass the income and assets tests.

Superannuation preservation age – this is the minimum age when you can access your superannuation money, and it depends on your date of birth. For most people, preservation age is 60, but it was a lower age for those born before July 1, 1964.

You generally cannot access your superannuation savings until you turn 65, unless you have reached your preservation age and then retire from the workforce. Recent analysis by KPMG found that the average age of retirement in Australia is 66.2 years for men and 64.8 years for women.

Choosing when to retire depends on several factors, such as whether you’ re still paying off a mortgage and other debts, facing significant expenses like home renovations, your partner’s circumstances, simply wanting to continue working because it gives you a sense of purpose and keeps your mind active, or wanting to keep adding to your superannuation.

Macquarie University modelling suggests that Australia will eventually raise the pension age to 68 by 2030, 69 by 2036, and 70 by 2050. While any change to age pension eligibility would likely be unpopular, a gradual approach seems more likely to be accepted than an abrupt increase, particularly as it aligns with significant demographic shifts.

A low birth rate and an ageing population are reducing our taxpayer base, especially when combined with caps on immigration, while the proportion of people expecting a government-funded pension keeps growing. Australians are also living longer and generally are healthier as they age, meaning those on the aged pension now and in the future are likely to receive it for many more years than their parents or grandparents did. Some change will be necessary unless taxes are also raised, which would be another unpopular decision.

For better or worse, the state of your finances will play a huge role in helping figure out when you can retire.

How just $2,000 can make a difference to your financial well-being

Financial anxiety isn’t new, but since the global pandemic, it has become worse for many of us, especially at work, where constantly thinking about your finances increases stress and interferes with productivity and performance.

Recent research by global investment firm Vanguard has highlighted the significant relationship between emergency savings and financial well-being, showing that even a modest savings cushion can alleviate significant financial stress. Few of us, however, actually have any.

More than a third of households would struggle to pay an unexpected $400 expense. Even asset-rich or higher-net-worth families often still live “hand to mouth” because of tight cashflow..

Unexpected expenses — like medical bills, car repairs, or a job loss — in addition to insurance renewals, holiday trips, and even Christmas, all create financial stress. Vanguard’s study emphasises that households that lack any savings face higher levels of anxiety and insecurity. This financial strain can adversely affect mental well-being and overall life satisfaction, creating a cycle of stress that can be hard to escape.

One of the study’s key findings is particularly striking: having as little as $2,000 in emergency savings can significantly lessen your financial stress. Individuals with this level of savings reported feeling more secure and confident when facing financial uncertainties. This modest buffer allows individuals, couples, or families to handle unexpected expenses without resorting to high-interest debt or making drastic financial choices that could lead to long-term instability.

The research further indicates that those with emergency savings not only manage shocks more effectively but also engage more readily in healthy financial behaviours. With a safety net in place, individuals feel more inclined to invest in their future, whether through retirement accounts, additional super contributions, or other investment vehicles, ultimately improving their long-term financial outlook.

The aim is to start an emergency fund by saving $2000, gradually increasing the balance to cover

three to six months’ worth of living expenses. You can set up automatic transfers to your savings account to make these contributions regular and effortless. One tip is to treat these savings like a monthly bill:  non-negotiable and essential for financial health.

Emergency savings play a vital role in enhancing financial well-being, and even a modest amount like $2000 can bring significant relief. As financial service providers, we encourage our clients to prioritise building an emergency fund for both peace of mind and a more secure financial future.

Chart of the month

With all the talk about productivity this chart highlights that not all the hard work is being done in the western world. In fact, the average hours worked in Australia has dropped to under 32 hours a week whilst those in the Sudan are working over 50. Asian nations are also putting in the long hours as are the Central Americans. We can deduce from this that developed countries are enjoying a better work life balance which is something that it important to remind ourselves of.

Secret Santa: funding Christmas with the points you already have

Australians are busy with festive gift shopping, and while the upcoming weeks bring happiness with family and mates, they can also lead to a large credit card bill.

If you’re looking for ways to fund your Christmas shopping without tapping into your main budget, the solution may lie in the digital treasure chest you’ve accumulated throughout the year: your airline and hotel points, along with other credit card and loyalty rewards.

These assets aren’t just a way to upgrade to business class, get premium legroom seats, or enjoy a ‘free’ flight to visit the grandchildren; they provide an immediate, tangible boost to your purchasing power.

Nearly all major airlines, especially Qantas, have a rewards store where you can redeem your travel points for everything from kitchen appliances to the latest headphones. This offers a straightforward way to get physical gifts delivered directly to your door, fully paid for with points.

Virgin Australia’s Velocity loyalty program has announced a partnership with Myer, enabling you to redeem your points for purchases at Myer online or in-store.

You can also convert your airline points into retail gift cards or vouchers at major Australian retailers (e.g., Amazon, Myer, Target, etc.) or other specialty stores. These cards or vouchers can be used to buy presents or as gifts themselves.

Remember to collect points from your supermarket shopping and petrol purchases. Your everyday loyalty programs and credit cards can help build a generous gift fund.

If your credit card offers cash-back rewards, the simplest option is to redeem the accumulated balance as a statement credit or deposit it into your bank account. This effectively releases actual cash that you can then allocate specifically for your Christmas gift budget.

Loyalty programs linked to major retailers often allow you to redeem points at checkout. Check your balance and use it to buy clothes, gifts, pharmacy cosmetics, or other stocking fillers.

Keep an eye on your inbox for special earning campaigns. Double or triple points can be earned on specific shopping categories (such as apparel or travel). Steering your usual spending on essentials through the card with the biggest bonus can boost your points total when you need them most.

Finally, remember to check for any unused gift cards you’ve received but haven’t used in the past year; Australians are notorious for forgetting to use vouchers received for birthdays and Christmas. These can be used to buy presents this year. More than 20% of gift cards are never used!

And there’s always the old chestnut of setting up a dedicated savings plan for Christmas. You could start now instead of putting it off to the new year (and forgetting about it).

Dialling back the years with Jana Wendt

She was widely recognised across Australia as the Perfumed Steamroller, our most prominent and feared television journalist, who was once the highest-paid person on Australian television.

Jana Wendt (pictured below) has been off our screens for nearly 20 years , and recently published her first fiction book, 12 short stories called The Far Side of the Moon, described in one review as “an elegant collection, sometimes delightful, funny, and always observant of the human condition via the smallness of everyday lives”.

We thought it timely to share some prophetic words about the media that Wendt made way back in 1997, when delivering the second Andrew Olle Media Lecture:

“I was rewarded handsomely, extravagantly – I was paid what my employers believed I was worth – and that reward has now bought me the most valuable commodity of all – freedom. I am able to say many things that my colleagues, still tied to one or other mighty media empire cannot say. They are the ones who continue to work within an increasingly restrictive atmosphere. An atmosphere imposed by what has transformed ominously, from journalism that is true to itself, into journalism dictated overridingly by the market. There is nothing more soul-destroying than having to work at cross-purposes with what you really believe. There is nothing more destructive of a journalist’s talent than subordinating it to goals that have nothing to do with journalism. And yet more and more, journalists are asked to distort their values to the perceived dictates of the market.”

Wendt’s advice today is just as relevant. This is a grab from a recent interview with the AFR:

“Beware anyone who wants to take away your independent thoughts. Try and make sure that what you think is built on a solid foundation. Don’t become an automation.”

And, she adds, if you don’t have a flourishing intellectual life, find one. “Don’t lock yourself off to the potential of change or discovery.”

Given the shameless bias we now see across media organisations today we felt it relevant to revisit Wendt’s observations of nearly 30 years ago.

Friday Funny