We recently had three of Australia’s leading fixed income managers visit the Melbourne office, Charlie Jamieson from Jamieson Coote Bonds, Jay Sivapalan at Janus Henderson and Tim Toohey from Yarra Capital, sharing their thoughts on the year ahead, including which chart will be the most important to watch in 2020.

If a picture tells you a thousand words, a good chart tells you a million; it distils the historic narrative of that asset or index and hints at what might come to pass. 

The challenge is in knowing which charts matter most for investors today. So, while we could, we asked Charlie, Jay and Tim to nominate their chart for 2020 and to explain why it’s so important for investors today. Watch their responses below, and scroll down for the charts. 

Transcript and charts below

Charlie Jamieson: Commodity prices

I think for Australia it has to be commodity prices. Obviously, we've had a pretty powerful rally. A lot of that has been supply induced because of accidents offshore, that supply is coming back online and clearly we need China and the likes to still be a very heavy consumer. 

We know that the Chinese economy has had its own issues and so whether they're going to be consuming at the same rate at a time when supply will be coming back will be very important as to where Australia finally lands. It's looking good at the moment, but it's clearly the one to watch and very important for the Australian economy and its outlook.

Tim Toohey: US labour market

Well, I think the one chart that worries me the most is that when you look at some of the surveys measures that we have on where the tightness in the US labour market actually is, it's suggesting a marked step up from here from where wages growth could go. 

The general expectation is that wages are not really growing that fast and will likely peter out if those survey points are correct - and they have been correct since the mid-1990s at getting a good gauge of where inflation is going - that will turn markets on their head around the middle part of next year (2020). 

Jay Sivapalan: Australian labour market

Looking ahead to 2020, global growth should be a little bit better next year compared to this year. That's really as a result of the central bank activity that's occurred. In that environment, Australia will continue to muddle through and so we're really looking at the labour market. If we see unemployment starting to rise next year, we know that that's a cue for the RBA to act.

 

The single biggest driver of markets in 2020

If you missed it, we also asked Charlie, Jay, and Tim what's next for the Aussie rates, the Aussie Dollar and US rates in the single biggest driver of markets in 2020.