THE CEDAR QUARTERLY
A narrow market, a hawkish turn.
JUNE QUARTER 2026 · MARKETS & PORTFOLIO OUTLOOK
Shares pushed to fresh highs on an extraordinary run of technology earnings — then wobbled hard in late June. The US Federal Reserve turned hawkish.
Here is what we saw this quarter, and how we are positioning portfolios from here.
IN BRIEF
Global shares reached new highs on an exceptional artificial-intelligence (AI) earnings run, before a sharp late-June pullback in technology and semiconductor stocks.
The US Federal Reserve turned hawkish — markets now lean toward rate rises, not cuts — while Australia's RBA held steady and stayed on the sidelines, its next move genuinely two-way.
Oil round-tripped from above US$100 to the high-US$70s as a Middle East conflict eased; gold fell despite the tension as the US dollar surged — which lifted the value of unhedged global holdings for Australian investors.
The largest share-market float in history — SpaceX — opened a wave of mega-floats that may reshape where market leadership sits.
01 THE QUARTER IN MARKETS
Strong shares, a hawkish jolt, and a safe-haven that wasn't
For most of the quarter it was a buoyant period for shares. US and global markets pushed to fresh records, carried by a remarkable earnings season — US company profits grew roughly 28% over the year, the sixth straight quarter of double-digit growth, with the technology sector doing much of the lifting on the back of the AI investment boom.
That confidence was tested in the final week of June, when a scare over future memory-chip demand triggered a sharp sell-off in semiconductors that rippled from Asia through to Wall Street — a reminder of how much the market now leans on a narrow band of AI-related winners.
Two macro events reshaped the backdrop. A flare-up in the Middle East sent oil sharply higher mid-quarter before a de-escalation pulled Brent crude back from above US$100 to around US$78. And — counter to the usual playbook — gold fell through the conflict, dropping below US$4,000 and around 20% from its January peak. The reason is instructive: with the US dollar surging to a 13-month high and central banks signalling higher rates, the opportunity cost of holding gold outweighed its safe-haven appeal. The quarter also delivered the largest share-market float in history, as SpaceX raised around US$75 billion and briefly traded above a US$2 trillion valuation — the first of a wave we discuss below.
Indicative direction over the June quarter, as at late June 2026. Past performance is not a reliable indicator of future performance.
What this means for you: our global holdings did well in their own right — and, because they are unhedged, the softer Australian dollar made those gains worth more to you in Australian-dollar terms this quarter. It is a tailwind we are happy to have, though a rising Australian dollar would work the other way.
02 WHAT'S DRIVING OUR THINKING
The forces shaping the next twelve months
Interest rates are the master variable
The biggest shift this quarter was tone. The US Federal Reserve held rates steady but made clear that, with inflation still above target, cuts are off the table for now and further increases are possible — markets have responded by pricing the next move as up. The RBA, by contrast, simply held and stayed on the sidelines: its next move is genuinely two-way, dependent on the data. That divergence — a hawkish Fed, a watchful RBA — is much of why the US dollar has been so strong, and it shapes almost everything else.
The AI engine is real — but the market is narrow
The earnings powering this market are genuine and still accelerating. The risk is not that the story is fake; it is that so much of the market's value rests on a handful of names — the largest companies still make up around a third of the US market. Encouragingly, the rest of the market has begun to do more of the work this year, which is exactly the broadening we want to see.
Leadership is already broadening
2026 share-market return: the giants vs the rest of the US market
Approximate calendar-year-to-date 2026 returns; "the giants" are the largest US technology companies, "the rest" the remainder of the broad US index. As at late June 2026. Past performance is not a reliable indicator of future performance.
Liquidity is ample now — but the tide is turning
Australia is slowing, and the Budget has reshaped the landscape
Growth has cooled, households remain under cost-of-living pressure, and Budget changes to property taxation are weighing on housing. The flip side is that those same changes are steering money toward income-producing investments, fixed income and superannuation — a structural tailwind for the kinds of assets we favour for stability.
Credit markets are pricing very little risk
The extra return investors earn for taking credit risk is near its lowest in years, even as cracks appear in parts of private lending. We treat that as a reason for caution, not comfort — and a high bar for any income idea that simply reaches for yield.
A wave of mega-floats is arriving — and it cuts two ways
The SpaceX listing in June was the first of an extraordinary run of very large technology floats. The makers of ChatGPT (OpenAI) and Claude (Anthropic) — each privately valued close to US$1 trillion — have filed to go public, though neither listing is yet confirmed; timing will depend on regulatory review and market conditions.
Two features matter for portfolios. The first is where the buying money comes from. A growing view holds the most likely source is the technology giants themselves: to fund the new names, investors — and the index funds obliged to hold them — may need to trim the handful of mega-cap winners that have led for years. The second is supply. Only a small fraction of SpaceX — under 5% — was floated at listing, which flattered its early price; far more stock is released from escrow in stages from late July, beginning after its first results as a listed company. The same pattern would follow any OpenAI or Anthropic float: a thin initial listing, then a steadily rising tide of shares as early investors are freed to sell. Together, a meaningful new call on the market's capital is forming. Not everyone agrees the effect will be large — some argue limited free floats keep it contained — but we read it as one more reason to spread a portfolio's engine more widely.
What this means for you: a crowded corner of the market may face a new source of selling — we would rather own the parts of the market positioned to receive those flows than the parts that may have to supply them.
03 FIXED INCOME & CREDIT
Paid little to take risk — so we hold quality and stay patient
Bonds and credit had a quietly constructive quarter. Shorter-term government yields rose as the prospect of rate cuts faded, while the extra yield investors earn for lending to companies stayed unusually thin — credit markets are, in short, being paid very little to take risk.
Beneath that calm surface, we are watching the parts of private lending where stresses tend to surface first. We see no cause for alarm, but a market priced for perfection is a market that rewards caution and quality over reaching for the highest headline yield. The Budget's property changes are also redirecting savings toward income investments, which should support demand for well-run credit over time.
Across our own fixed income sleeves the result was steady and positive, with income doing most of the work — which is exactly the role this part of the portfolio is meant to play. Our diversified credit-income holdings led, combining modest price gains with dependable distributions; our government and short-dated holdings added smaller, stable returns; and our private-credit holdings contributed chiefly through income. One holding was added only recently and is too new to judge. None of this is dramatic — and in this sleeve, undramatic is the point.
What this means for you: with cash and short-dated bonds now paying a real return, we are content to earn a dependable income from high-quality sources and keep some powder dry, rather than chase yield into the riskier corners of credit.
04 HOW WE DECIDE
Inside the Cedar Equity Weighting Model
The most important decision we make is not which shares to own, but how much share-market exposure to hold at all. To answer that consistently — and without emotion — we read the market through three lenses we call our Barometer.
Valuation, Monetary, Trend
Valuation (V) asks whether shares are cheap or expensive relative to history — today they are expensive, particularly in the US. Monetary (M) asks whether central banks are a tailwind or a headwind — currently neutral, with the Fed restrictive and the RBA on hold. Trend (T) asks whether the market is actually rising, not whether it should be — and here the answer is yes, the uptrend is intact.
Together these set our Barometer, which guides how much core share exposure the Stable portfolio holds within a deliberately wide range. Right now the reading is balanced: we are fully engaged in the market, but not stretching for more.