Stay up to date with what’s happened in the Australian economy and markets over the past month.

We are all about keeping you informed and empowered and this month’s economic and market video provides a quick overview of the shifting Australian economic landscape and what’s driving market movements.

The big news was the RBA lifting the official cash rate to 4.60%, introducing new headwinds for local markets and households.

Markets navigated a challenging month characterised by persistent geopolitical stress in the Middle East, rising bond yields, and stubborn inflation fears.

Meanwhile a softer Australian Dollar and a retreat in consumer sentiment reflected growing caution.

Click here to view our update.

Please get in touch  if you’d like assistance with your personal financial situation.

Integrity One Wealth Advisers  Pty Ltd

If the financial markets could talk, then bonds would probably be saying: “We’re not convinced the story is over yet”.

Bond yields have been rising around the world as investors reassess the outlook for inflation, economic growth and government borrowing. The moves have been significant enough to influence mortgage rates, government finances and investment portfolios.

Experienced bond investors will be well aware of what’s been happening. For everyone else, the developments offer the chance to understand why professional investors see the bond market as one of the economy’s most important barometers.

You might never have bought a bond, researched a bond ETF or checked the yield on a government bond. But there’s a good chance that bonds already play a role in your investment portfolio through your superannuation account.

That’s one reason the recent attention on bond markets matters.

Looking back

To understand why bonds are attracting attention now, it helps to take a look back.

From the early 1980s to around 2020, developed economies experienced one of the longest declines in interest rates and bond yields in modern history. Falling inflation, globalisation, technological advances and relatively stable economic conditions helped drive yields steadily lower.

Following the Global Financial Crisis and then the COVID-19 pandemic, many government bond yields fell to historically low levels. In some countries, investors were even willing to accept negative yields.

That changed dramatically from 2022 onwards as inflation surged. Central banks, including the Reserve Bank of Australia, responded by rapidly increasing interest rates.

The rapid increase in yields created short-term pain for existing bond investors but ultimately restored something that had been largely missing from bond markets for years: meaningful income.

Today, many commentators believe the era of ultra-low bond yields may be over. While inflation has eased from its peak, investors are increasingly questioning whether interest rates will return to the unusually low levels that prevailed during the 2010s.

What’s happening in Australia?

Australian bond yields have moved higher during 2026 as investors responded to stronger than expected inflation and economic activity, and commentators are not confident that inflation will return quickly to the Reserve Bank’s target range.

Three-year government bond yields moved above 5%, while 10-year bond yields approached levels not seen for more than a decade.

Higher yields affect far more than investment portfolios. Governments face increased borrowing costs, businesses pay more to raise capital, and lending rates throughout the economy may come under upward pressure.

The global picture

But Australia is not alone. Across the world, governments are issuing large amounts of debt to fund spending commitments, infrastructure projects and budget deficits.

Earlier this year, the International Monetary Fund (IMF) warned about the risks of geopolitical tensions, inflation uncertainty and rising levels of government debt.

Meanwhile, BlackRock notes that government borrowing is increasingly competing with private-sector demand for capital, helping push long-term yields higher in many countries. Its investment team believes that higher yields have created attractive income opportunities, but investors need to be more selective than in the past.

Understanding duration

‘Duration’ is one of the most important concepts in bond investing.

It measures how sensitive a bond’s price is to changes in interest rates. Generally speaking, the longer a bond’s duration, the more its price will move when rates change.

For example, a 10-year bond will usually experience greater price movements than a two-year bond if market interest rates rise or fall.

That helps explain why some bonds can experience significant short-term losses even when the issuer is considered financially secure. Investors often focus on credit risk, but interest-rate risk can be just as important.

The sharp rise in global yields over recent years has highlighted the importance of duration. Longer-dated bonds, which benefited hugely when rates were falling, were among the hardest hit when yields moved higher.

The bottom line

After years of being overlooked, bonds are once again demanding investors’ attention with higher yields providing more income than for much of the last decade.

At the same time, the rising yields are a reminder that bonds are not risk-free and that issues such as duration, inflation and government borrowing matter.

Although forecasts differ on the precise direction of interest rates, there appears to be broad agreement that investors should prepare for a more complex bond market.

Integrity One Wealth Advisers  Pty Ltd

Stay up to date with what’s happened in the Australian economy and markets over the past month.

Australia’s economic performance over August was characterised by a distinct “two-speed” slowdown, where inflation pressures persisted amidst overall subdued growth.

Rapidly rising discretionary spending along with global uncertainties may mean another interest rate rise in September or November.

Global stock markets performed strongly, despite geopolitical tensions and shifting rate hike expectations.

Click here to view our update.

Please get in touch  if you’d like assistance with your personal financial situation.

Integrity One Wealth Advisers  Pty Ltd

For many people approaching retirement, the transition from full-time work to retirement is no longer a sudden stop. Instead, it’s often a gradual process that involves reducing work hours, maintaining cash flow and continuing to build retirement savings.

One strategy that can support this approach is a Transition to Retirement Income Stream (TRIS or TTR).

While TTR strategies have been available for many years, they are often overlooked despite offering valuable flexibility for people in their 60s who are still working.

What is a TTR strategy?

A TTR strategy allows you to access some of your superannuation while continuing to work, provided you have reached your preservation age. For anyone born on or after 1 July 1964, preservation age is 60.

The arrangement works by transferring part of your super balance into a TTR pension account. You then receive regular pension payments while continuing to earn employment income. This can help replace lost income if you reduce your working hours or supplement your cash flow while making additional contributions to super.

Unlike a standard retirement-phase pension, a TTR pension has restrictions. Generally, you must draw a minimum pension each year and cannot withdraw more than 10% of the account balance annually. Lump-sum withdrawals are generally not permitted while the TTR remains in the pre-retirement phase.

Who might benefit?

A TTR strategy may suit people who:

• want to reduce their working hours without a significant drop in income
• are approaching retirement but are not ready to stop work completely
• earn a moderate to high income and wish to boost superannuation through salary sacrifice
• want greater flexibility in planning their transition from work to retirement.

For example, someone aged 60 might decide to move from working five days a week to three days a week. By drawing a pension from their super, they can help replace part of their lost income and ease gradually into retirement.

Combining work income and pension payments

One of the key attractions of a TTR strategy is the ability to combine employment income with pension payments.

If you are aged 60 or over, pension payments received from a TTR income stream are generally tax-free in your hands. Instead of experiencing a substantial reduction in disposable income, a tax-free pension payment can help bridge the gap.

The tax-saving strategy

Another commonly used TTR strategy involves salary sacrifice.

In this approach, an employee diverts part of their salary into superannuation through concessional contributions, which are generally taxed at 15% within the super fund. The reduction in take-home pay is then partially replaced through tax-free TTR pension payments.

For people on higher marginal tax rates, this may improve tax efficiency because income that would otherwise be taxed at personal rates may instead be contributed to super and taxed at a lower rate. The TTR pension can then be used to maintain cash flow.

In some circumstances, this strategy may also help increase retirement savings while maintaining a similar standard of living before retirement.

Opportunities

• Smoother transition into retirement
  One of the biggest benefits is flexibility. Rather than stopping work abruptly, a TTR strategy can support a gradual reduction in work hours.
• Tax-free pension payments after age 60
  For many Australians, TTR pension payments received after age 60 are tax-free, which can improve overall cash flow and make part-time work more financially attractive.
• Continued super contributions
  Even while receiving a TTR pension, your employer must continue making Super Guarantee contributions if you remain eligible. This helps replenish part of the super being withdrawn.
• Potential tax efficiencies
  For some higher-income earners, combining salary sacrifice with a TTR income stream may reduce overall tax and improve retirement outcomes.

Considerations

A TTR strategy may not be suitable for everyone.

• Reduced retirement savings
  Drawing on super before fully retiring means your retirement capital may have less time to grow. If withdrawals exceed ongoing contributions and investment growth, your final retirement balance may be lower.
• Earnings within the pension are not tax-free
  Many Australians are surprised to learn that TTR pensions no longer receive the same tax treatment as retirement-phase pensions.Since the 2017 reforms, investment earnings on assets supporting a TTR pension that is not yet in retirement phase are generally taxed at 15%. The fund cannot claim exempt current pension income on those assets until the member satisfies a full condition of release, such as retirement or turning 65.
• Government benefit implications
  A TTR strategy may affect eligibility for certain government benefits or entitlements.
• Additional complexity
  Managing pension withdrawals, contribution caps, salary sacrifice arrangements and tax consequences can become complicated. Professional advice is often valuable to ensure the strategy remains effective and compliant.

Is a TTR strategy right for you?

A Transition to Retirement strategy can provide valuable flexibility for people who want to scale back work, supplement their income or potentially improve the tax efficiency of their retirement planning.

But the benefits depend heavily on individual circumstances, including age, income level, super balance, retirement objectives and tax position. What works well for one person may offer little benefit for another.

If you are approaching retirement and would like to explore whether a TTR strategy could help you achieve your goals, please contact our office. We can help assess whether the approach aligns with your broader retirement and financial planning objectives.

Integrity One Wealth Advisers  Pty Ltd

Stay up to date with what’s happened in the Australian economy and markets over the past month.

July provided some welcome signs for the Australian economy, with inflation easing more than expected last month, cooling bets of interest rate hikes in the short term.

Globally, shares delivered strong gains and Australian equities reached their highest level since early March.

However, risks  remain  elevated. Caution in US markets following the Federal Reserve’s decision to keep rates on hold tempered sentiment and served as a reminder of lingering inflation concerns.

Click here to view our update.

Please get in touch  if you’d like assistance with your personal financial situation.

Integrity One Wealth Advisers  Pty Ltd