Issue #19 | The Great Bond Sell-Off & GYG’s U-Turn

ASX - Top 3 Winners & Losers
Deals Down Under - Private Credit
Global Markets - The Great Bond Sell-Off
Other News - Aussie Politics, Sport and Culture

The ASX 200 edged 0.4% for the week, its second weekly gain in six weeks. Investors returned to the share market as unemployment rose to 4.5%, reducing pressure on the RBA to lift rates further. There is also growing optimism about a potential US-Iran peace deal, a move that markets around the world will celebrate.

Despite hopes of a peace deal, this isn't the first time we have heard this news, and Trump once again remains a wildcard. Iran's comments on uranium enrichment and the Strait of Hormuz rattled confidence late in the week, and any headline out of the Middle East could gap the market at Monday's open.

This week’s best performers

Elevra Lithium Limited (ASX:ELV) +24.70%

After being down over 18% last week (covered in Issue #18), the stock bounced back as investors reassessed the full picture. While the $295 million raise diluted existing shareholders and initially tanked the share price, the expansion could more than double the mine's post-tax NPV, giving the market reason to reconsider – which they did this week.

Guzman Y Gomez Ltd (ASX:GYG) +16.53%

GYG rallied this week, despite closing down its Chicago restaurants and exiting the US market entirely – a core part of GYG's pitch at its 2024 IPO. This plan to expand into the US was bold, but to fight off Chipotle, Taco Bell, and other household Mexican fast-food giants in the US was never going to be easy. Founder and co-CEO Steven Marks conceded defeat, but also noted that turning the business profitable would take significantly more time and capital than originally planned. Meanwhile, GYG lifted its FY26 earnings guidance to $85m and remains on track to open 32 new Australian restaurants.

Sunrise Energy Metals Limited (ASX:SRL) +11.99%

Sunrise Energy Metals had no firm-specific news driving the move this week, yet the critical mineral developer has risen nearly 3,500% in the past year. The company's appeal lies in its scandium deposit in central-west NSW – a largely unknown critical mineral with major potential in aerospace, defence and 5G infrastructure. Already backed by US defence giant Lockheed Martin, Sunrise Energy Metals is one to watch.

This week’s worst performers

Predictive Discovery Limited (ASX:PDI) -22.58%

PDI's downfall this week seems to be from its own success. No firm-specific news drives this decline, but after gaining more than 72% over the past year following gold’s rally and its merger with Robex Resources – investors are simply taking their profits.

Brambles Limited (ASX:BXB) -22.58%

Brambles had its worst trading day in more than two decades on Monday after cutting its FY26 profit guidance from 8–11% growth down to just 3–5%. The global supply-chain logistics company had a backlog in its US subcontractor service centre network. Customers using automated handling systems require more consistent, higher-quality pallets to function, and Brambles hasn't delivered on its efficiency, leading to a US$60m earnings hit. Despite the bad news, the company announced a US$400m share buyback, signalling that its shares may be undervalued – but investors didn't buy this, sending the stock down.

Eagers Automotive Limited (ASX:APE) -9.91%

After a rough few months, the Brisbane-based vehicle dealer fell hard this week. No clear catalyst drove the move, but its recent acquisitions in Audi Centre Melbourne and a stake in Grand Motors Group have brought attention from investors to its acquisition-led growth strategy. While Eagers' long-term shareholder returns remain strong, investors are reassessing whether its physical dealership network can hold its value as online and direct-to-consumer car sales accelerate, as foot traffic declines, fixed costs stay high, and margins potentially suffer.

Most Australians park their money in super, buy shares on the ASX, or leave it in the bank. But there's a third part of Australia’s financial system growing fast underneath all of that: private credit. 

So what is private credit?

Private credit is lending outside of banks and public bond markets. Businesses borrow directly from a private fund, rather than going to big banks like CBA or NAB for a loan. For these funds, they earn interest at a floating rate, closely tracking Australia’s interest rates - with a premium, of course. For borrowers, they get flexibility that banks can’t usually offer, like long loan periods and fewer restrictions. Loans range from senior secured debt to mid-market companies, to hard asset-backed lending across real estate, agriculture, and infrastructure.

Why is it booming in Australia?

Post the GFC, banking regulation made it harder for banks to give out certain types of loans, particularly to SMEs and in commercial real estate. This gap was filled by private credit, with AUM rising to $234.5 billion in 2025, a 500% increase over the past decade. Australia's $4.3 trillion superannuation system also needs somewhere to put its money, and private credit's longer-term, income-generating nature suits super funds well. 

How does it compare to the US?

The US market is far more mature, with global private credit AUM projected to reach US$3 trillion by 2028, dominated by fund giants like Blackstone and Apollo. Australia is earlier in that cycle and more conservative, with lower leverage and smaller deals. The US is a bit riskier, lending heavily to AI and tech companies secured against software and IP rather than hard, physical assets. If those companies struggle, there's not much to recover. Australia has largely stayed anchored to tangible asset-backed lending, using these tangible assets as collateral if things go wrong. 

What's the catch?

Liquidity. Private credit is relatively illiquid – you can't sell your position like shares. Also, the industry has been growing mostly during a period where borrowers have been able to repay their loans, so a genuine credit decline would test these loans in ways they haven’t been before. 

Private credit’s momentum is real. Super funds are allocating more, retail access is widening, and the gap left by banks shows no signs of closing. For Australia, the question isn't whether private credit becomes a mainstream part of the financial system, it's how quickly.

Global bond markets sold off sharply this week, with long-term government yields hitting decade-plus highs across major economies. On Tuesday, the 30-year US Treasury yield reached 5.2% – its highest since 2007 – while the 10-year Treasury pushed to 4.7%. The sell-off spread well beyond the US: 30-year UK gilts climbed to 6%, Japan's 30-year bond yield hit 4% for the first time in history, and yields rose across Germany and France. 

Three main forces are behind the move. The conflict involving Iran has disrupted oil supply through the Strait of Hormuz, pushing crude above US$100 a barrel. Higher energy prices feed directly into inflation, which leads investors to expect interest rates to stay elevated for longer, making existing low-yield bonds less attractive and forcing yields higher. That inflation fear has also flipped rate expectations entirely: earlier this year, markets were pricing in cuts from the Fed and other central banks; now they're pricing in hikes. Adding further pressure, governments running large deficits are issuing record volumes of new debt, and investors are demanding higher returns to absorb it. 

Australia has not escaped. On Wednesday morning, the 10-year Australian government bond yield touched 5.07% – its highest in 15 years. The RBA has already raised rates three times this year, with core inflation at 3.5%, well above its 2.5% target. But a surprise rise in unemployment to 4.5%, a four-year high, complicated things: weaker jobs data signals the economy is losing momentum, reducing the case for further hikes. That pushed the three-year bond yield, which tracks near-term rate expectations, sharply lower. 

Globally, rising bond yields should push share markets lower – but with fund managers pouring record allocations into stocks, prices have kept climbing. History suggests that it can only last so long before rising borrowing costs win out. For Australia, the stakes are higher still. With unemployment rising, the property market cooling, and inflation stubbornly above its target, the RBA has little room to move in either direction. Cut rates, and you risk inflaming inflation further; hike again, and you risk tipping a weakening economy into something worse.

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