Franklin Templeton has been tactically adjusting its fixed income portfolios in expectation of a possible global financial crisis, which could see Australia fall into recession, and is looking to take advantage of attractive opportunities presented by the fallout.
Australian household debt to gross domestic product (GDP) was around the second-highest in the world and was currently at its highest level, leaving it vulnerable to a deflationary shock.
The Reserve Bank of Australia cut rates this month and was likely to cut again next month while the Federal Reserve and Bank of England both made emergency rate cuts to their own interest rates. With only a limited amount of cuts available to them, it was likely central banks would then need to embark on quantitative easing.
Andrew Canobi, director, fixed...