Summary
Yield Curves & LICATs: Navigating Income in a Diverging Macro Landscape
As bond markets continue to reflect diverging economic signals, investors are increasingly turning to Listed Investment Credit Trusts (LICATs) for yield, liquidity, and portfolio stability. This week’s analysis brings together macro yield curve trends and LICAT pricing behavior to offer a clearer view of market sentiment.
Australia: A Curve That Still Slopes Upward
The Australian 3-year and 10-year government bond yields have maintained a positive spread throughout the observed period. While the curve has flattened slightly in recent months, it remains upward-sloping—suggesting investor confidence in long-term growth and a more measured monetary policy outlook. This environment supports longer-duration credit strategies and income-focused vehicles.
United States: Inversion Signals Caution
In contrast, the U.S. yield curve has been inverted since mid-2022, with 2-year yields consistently exceeding 10-year yields. This inversion is widely interpreted as a recessionary signal, reflecting short-term rate pressure and long-term economic uncertainty. Investors are watching closely for signs of a policy pivot or slowdown, and this caution is reflected in credit market pricing.
LICATs Weekly Summary
Name Code Closing Price Running Yield NTA Premium/(discount) to NTA Market Capitalisation (millions) Average Daily ASX turnover (000s) Acorn Capital Investment Fund ACQ $0.92 0.07 1.10 -0.17 82.43 56 Glennon Small Companies GC1 $0.54 0.06 0.79 -0.32 25.96 31 Katana Capital KAT $1.35 0.02 1.34 0.01 43.10 7 KKR Credit Income Fund KKC $2.31 0.09 2.46 -0.06 745.05 431 MCP Income Opportunities Trust MOT $1.92 0.09 2.15 -0.11 638.10 397 MCP Master Trust MXT $1.95 0.08 2.01 -0.03 2385.03 1,087 Perpetual Credit Income Trust PCI $1.19 0.07 1.11 0.08 579.48 505 Qualitas Real Estate Income Fund QRI $1.61 0.08 1.61 0.00 977.70 283 WAM Alternative Assets WMA $1.05 0.08 1.19 -0.12 206.38 209
Closing price as of the end of the week.