NAB Morning Call

Thursday 22nd September 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9No surprise, the Fed has lifted rates by 75 basis points. NAB’s Gav Friend says the response in the bond markets was a reaction to the dot plots, which suggest rates will be at 4.4% by the end of the year, 4.6% next year and 3.8% in mid-2024. They all represent a considerable increase in the numbers given back in June. The Bank of England meets later and, although markets are expecting a 75-basis point hike there too, its unlikely to happen as inflation could well be tamed by a high level of government support for fuel costs. In other news, Putin has called up 300 thousand reserves and threatened the use of all resources, even nuclear, if the west attacks territories deemed by referendums to be part of Russia. No bluff, he said. We look at what impact this will have on market sentiment. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 21st September 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9Bond yields have pushed higher in the US and the UK ahead of the Fed and the Bank of England meetings tomorrow. NAB’s Taylor Nugent says the expectation is still for a 75 bp hike, although that was the assumption for the Riksbank too, but they lifted rates by 100 yesterday. But as Taylor points out, they are starting from a lower base. But are there signs that inflation is easing. Oil is down, China is reopening, Hong Kong has eased restrictions and Taiwan is busy responding to demands for new iPhones. Is life starting to get back to normal and could easing of supply pressures bring prices down? Or simply create yet more demand? Ukraine presents further risk today, with Russia planning sham referendums in captured territories, which has the potential to escalate the war.  Hosted on Acast. See acast.com/privacy for more information.

Tuesday 20th September 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9It was a quiet session overnight with the UK on holiday and a fair bit of attention on a funeral service in London. Nonetheless bond yields continued to push higher. JBWere’s Sally Auld says markets have priced in rate rises this week of 80 basis points in both the UK and US, meaning there’s some chance the hike will be more than 75. ‘Keeping at it’ was the title of Paul Volcker’s book and that seems to be the Fed’s philosophy right now – and for other central banks, Japan and China excluded. Canada's inflation numbers today will give us a good indication of whether going hard and going early helps contain inflation any quicker.  Hosted on Acast. See acast.com/privacy for more information.

Monday 19th September 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9It’s a confusing week ahead of central bank meetings and public holidays. The Queen’s funeral will attract most attention today, but not on the markets that could see a quiet start to a busy week. NAB’s Ray Attrill says it’ll add to the volatility this week, driven by uncertainty and liquidity. Whilst most expect a 75 basis point rise from the Fed this week, there’s still a chance they will lift by 100. The UK faces a decision by the Bank of England and a mini budget from Kwasi Kwarteng, the new Chancellor, that could add to big increases in bond issuance. Plus, a meeting of the UN General Assembly which could (perhaps) see Putin lose more allies.  Hosted on Acast. See acast.com/privacy for more information.

Friday 16th September 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9Front end bond yields pushed higher in the US, as shares fell sharply and oil prices fell. The inversion in the yield curve continues to point to a recession with investors clearly expecting a higher terminal rate by the Fed. NAB’s Gavin Friend says markets are still reeling from the higher than expected inflation read this week, and much now rests on what Jerome Powell says next week. The picture is muddy, with today’s data releases fairly mixed. US retail sales were up, but the Philly Fed manufacturing index fell, with a big decrease in new orders. We try and make sense of it all in today’s podcast, along with analysis of yesterday’s Australian employment numbers and words on the meeting between Presidents Putin and Xi in Uzbekistan yesterday. Hosted on Acast. See acast.com/privacy for more information.

Thursday 15th September 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9Yesterday, markets responded sharply to the higher-than-expected inflation read from the US. You might have expected a bit of a correction today as markets take stock of the news, but that didn’t really happen. As NAB’s David de Garis points out, there is still an expectation of sharp moves by the Fed, with the possibility of a 100bp rise still on the table. UK inflation fell back into single figures, but only because petrol prices have fallen. Today Australian employment numbers and US retail sales are the figures to look out for. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 14th September 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9Markets were caught off guard by the higher-than-expected inflation rad fom the US. The fall in energy prices has been offset by a broad-based rise across all other sectors. US equities fell heavily, bond yields rose and the US dollar gained significant ground. NAB’s Ray Attrill says the results have raised the spectre of a possible 100bp rise by the Fed and a higher terminal rate. The UK gets their inflation numbers later, after falling unemployment numbers and rising wages yesterday. So, what about Australia, where the NAB Business Survey showed improvements in business conditions and sentiment – but what did it tell us about inflation expectations? Hosted on Acast. See acast.com/privacy for more information.

Tuesday 13th September 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9Risk sentiment is improving, with shares up in the US and Europe and the US dollar losing ground to the Euro. Why? It’s a question Phil Dobbie puts to NAB’s Tapas Strickland in today’s Morning Call. The EU has drafted an energy plan that includes a windfall tax on fossil fuel providers, but the data over the last 24 hours shouldn’t imbue confidence. UK GDP growth was below expectations, and the IFO has substantially downgraded their forecasts for Germany. The big event today is the CPI figure for the US tonight, although its unlikely to change the expectations for a 75bp hike from the Fed at their next meeting. Hosted on Acast. See acast.com/privacy for more information.

Monday 12th September 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9Curiously, US shares pushed higher towards the end of last week, even though there is no sign of the central bank slowing down its path of rate rises. Quite the reverse in fact. NAB’s Rodrigo Catril says short-selling has been a driving force behind this and we can expect volatility in equity markets for some time. Meanwhile, front end bond yields are rising as Fed speakers find new ways to signal continued tightening, with no let-up until the job is done. We might hear the same from the Bank of England, except they’ve pushed back their next meeting to next week in respect to the death of Queen Elizabeth II, but it could work out as much better timing for them as well. The EU are struggling to find an answer to energy prices, but have agreed that something needs to be done, hopefully before the cold weather sets in.  Hosted on Acast. See acast.com/privacy for more information.

Friday 9th September 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9Even though a big hike from the Fed is widely anticipated, bond yields continue to move up as Jerome Powell and other speakers talk it up. The moves were even bigger in Europe where an expected 75 basis point hike saw a sharp rise up in 2 year Bund yields. NAB’s David de Garis says markets expect that, at some point soon, central banks will start pulling back and they are looking for that inflection point. Today there was no sign of that happening anytime soon on either side of the Atlantic. But the RBA’s Jerome Powell was sounding far more dovish. The new UK PM outlined her plans to subsidise energy, which will involve a massive amount of government spending. Sadly, the news was overshadowed by the passing of Her Royal Highness. Irrespective of your views on the monarchy, most people acknowledge Elizabeth II was a warmly regarded, hard working lady who will be sadly missed. Hosted on Acast. See acast.com/privacy for more information.

Thursday 8th September 2022 View our disclaimer and terms of use: nab.co/3shJyyp View our NAB Financial Services Guide: nab.co/3rvJtI9 There were big market moves yesterday and overnight, with sharp drops in oil prices, bond yields falling, a turnaround in US equities and the US dollar gaining some ground, with the Yen falling to its lowest level in 24 years. NAB’s Skye Masters says there wasn’t much data to influence the markets, but there was a lot of Fed commentary that is suggesting that perhaps the pace of interest rate moves might begin to slow down. Falling oil prices and government subsidies on gas prices will also be seen as helping to tame inflation. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 7th September 2022 View our disclaimer and terms of use: nab.co/3shJyyp View our NAB Financial Services Guide: nab.co/3rvJtI9 There was a strong response to the US Services ISM overnight, which came in stronger than expected. NAB’s Rodrigo Catril says they have raised expectations for a 75bp rate hike at the next FOMC meeting, pushing bond yields higher overnight. In the UK Liz Truss is officially Prime Minister and is expected to freeze energy bills with what could amount to a £1,500 subsidy per household. So that could help reduce inflation, but higher government spending could have the opposite effect, particularly in combination with planned tax cuts. There’s also discussion about the RBA decision, Australia’s widening current account surplus, China’s trade data and the Bank of Canada meeting tonight. A busy one. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 6th September 2022 View our disclaimer and terms of use: nab.co/3shJyyp View our NAB Financial Services Guide: nab.co/3rvJtI9 It’s RBA day today. NAB’s Ivan Colhoun talks through what to expect, whilst Ray Attrill looks at the worsening situation in the UK and Europe. Gas prices have risen after the closure of the Nordstream pipeline, and oil prices are also on the rise after OPEC+ agreed to production cuts from next month. We’ve also seen a revision in PMIs in Europe, with the UK services PMI moving into contractionary territory. Signs of resilience are quickly disappearing. It’s a different story for the US, though, where ISM numbers are expecting to stay above 50, adding to the pressure the US dollar will place on other major currencies. Hosted on Acast. See acast.com/privacy for more information.

Monday 5th September 2022 View our disclaimer and terms of use: nab.co/3shJyyp View our NAB Financial Services Guide: nab.co/3rvJtI9 There was a short-lived burst of positivity on Friday, when USD payrolls numbers delivered a Goldilocks result, with jobs rising, but wage rises easing and more people piling into the jobs markets. The good news was offset by news that Russia will not be reopening the Nordstream gas pipeline, adding to the pressure on Europe to navigate its way through winter. NAB’s Tapas Strickland talks through the market impact on today’s podcast, as well as the problems in China, where 65 million people are currently in lockdown in 33 cities. The ECB, RBA and Bank of Canada all meet this week, and the UK gets a new Prime Minister later today. Hosted on Acast. See acast.com/privacy for more information.

Friday 2nd September 2022 View our disclaimer and terms of use: nab.co/3shJyyp View our NAB Financial Services Guide: nab.co/3rvJtI9 We know the world is in an awkward place, but we keep getting positive data reads, like a strong manufacturing ISM from the US, retail sales picking up in Germany, UK house prices still strong – all the things central banks don’t really want to hear right now. So what happens if non-farms payrolls in the US tonight shows a labour market that isn’t showing any signs of weakening? NAB’s Ken Crompton reckons a soft read will cause more of a fall in bond yields than the response to a stronger set of numbers. It’ll be an asymmetric response, he says. Hosted on Acast. See acast.com/privacy for more information.

Thursday 1st September 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9Euro area inflation is the highest since the creation of the Euro and NAB’s David de Garis says markets are no pricing in a greater than 50 percent change that the ECB will lift rates by 75 basis points next week. That’s helped support the Euro today, whilst the pound falls further, to levels we saw in early 1985, when mullets were fashionable. Still are for some, of course. Australia’s construction sector has taken a battering, driven by weather and higher supply costs, but private sector credit growth remains strong. China’s PMIs show an economy that is taking a long time to recover – in part because of COVID, but hot weather has also had an impact. Friday’s jobs numbers will focus attention now, but the new ADP report has shown jobs growth for larger businesses and a fall in small business employment. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 31st August 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9The US jobs market grew last month, whilst consumer sentiment improved. It’s not what the Fed wants to hear. Do these positive numbers mean that the US can survive a soft-landing? No, says JBWere’s Sally Auld, it just piles the pressure on the Fed to be more aggressive on rate rises. The consumer sentiment probably reflects little more than a fall in petrol prices. We know Europe is set for a hard landing, even though gas prices have fallen and Germany’s reserves are up to 80 percent. But German inflation was higher than expected overnight, which suggests the European numbers will also be higher tomorrow, putting pressure on the ECB to move faster. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 30th August 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9Bond yields in Australia rose sharply yesterday. NAB’s Rodrigo Catril says it was part of the global response to Jerome Powell’s short hawkish speech in Jackson Hole on Friday, but it was also because of the much higher than expected July retail numbers for Australia, which might suggest the RBA will have to push harder to knock inflation down to size. There’s also discussion about how quickly the market in the US is expecting to see rates rise, and how quickly they expect inflation to fall. Also, the latest on the European energy crisis, why oil has pushed higher today and a look ahead to European inflation umbers and US jobs data. Hosted on Acast. See acast.com/privacy for more information.

Monday 29th August 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9We knew Jerome Powell would be giving a hawkish speech at Jackson Hole, so why were equity investors so surprised when he did just that? Clearly, they didn’t get the memo, says NAB’s Ray Attrill, referring to a huge sell off in US shares on Friday, mirrored by a big fall in the Aussie dollar. So how will the Aussie shape up now, if we see Europe and the US heading into recession, That’s more likely in Europe, where gas prices continue to rise and deliveries from Russia stop totally middle of the week, with a question mark on when – and if – they will start again. Meanwhile, Britain’s energy prices continue to rise to unprecedented levels. Where does it all end. And happy birthday to us; the Morning Call is six years old today. Hosted on Acast. See acast.com/privacy for more information.

Friday 26th August 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9There’s unlikely to be any surprises when Jerome Powell steps up to the podium at the Jackson Hole Symposium tonight (Australian time). It’s well signalled that he will be uber-hawkish, and with the Fed’s credibility on the line, best not to go too-soft when inflation is spiking. That said, NAB’s Taylor Nugent says there has been some pull back in bond yields ahead of the main act, whilst equities have pushed higher overnight. Minutes from the ECB have largely been overtaken by events. It was noted that a “recession would not necessarily diminish upside inflation risks, especially if it was related to a gas cut-off”, but the question remains, what can monetary policy do about it? And US GDP has been revised up, still in negative territory but gross domestic income perhaps provides a more realistic – and positive – picture of the health of the US economy. Hosted on Acast. See acast.com/privacy for more information.

Thursday 25th August 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9Ukraine has just celebrated Independence Day and it’s becoming clearer how much the UK and Europe is paying the price. NAB’s Gavin Friend paints a pessimistic picture about the outlook for that part of the world, as gas prices push ever higher. He says the Fed can raise rates to moderate demand in the US, but in Europe rate hikes will do nothing to mitigate rapidly rising energy prices. Joe Stiglitz has been saying overnight that interest rate hikes will do other than, he reckons, make inflation worse. Yet UK two-year yields shot higher overnight on expectations that the Bank of England will push ahead with a faster path of rate increases. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 24th August 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9It’s that time of the month when PMI reads give us a global snapshot of how everyone is doling relative to each other. NAB’s Ray Attrill says the US provided the biggest surprise with a sharp fall in the services number, moving further into contraction territory, with a read of 44.1 – a 27 month low. That’s somewhat worse than services numbers in Europe, and well below the UK, which continues to surprise, with a Services PMI read of 52.5 (actually growing). The bad news from the US was compounded by a fall in the Richmond Fed manufacturing index (also moving into contraction) and a further slowdown in new home prices. But Europe’s future continues to be dominated with higher fuel costs, which show no signs of settling down. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 23rd August 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9The US dollar has risen close to a multi-decade, against a falling Euro and pound, as the energy outlook in that part of the world worsens and gas prices continue to skyrocket. NAB’s Tapas Strickland says this has added to the resolve of central banks to tackle inflation with faster rises in interest rates. There is a plethora of PMI reports today. The question is, if they show any weakening in the performance of economies, will that be enough to moderate the hawkishness that’s prevalent amongst most central banks right now? Hosted on Acast. See acast.com/privacy for more information.

Monday 22nd August 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9Markets seem to have got used to the idea that central banks will be more aggressive with cash rate hikes, ahead of the Jackson Hole symposium at the end of the week. Part of the reason for that is because, what’s been done so far is clearly not enough. UK retails sales increased in July despite all the talk about the dire state of the economy. The Canadians are also out shopping. We also saw a big increase in purchase prices in Germany, in fact the largest monthly rise since 1949. All of this adds to the expectations that the meeting in Wyoming will see an increasingly hawkish stance from all gathered there. Hosted on Acast. See acast.com/privacy for more information.

Friday 19th August 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9Bond markets have been fairly lacklustre today. NAB’s Ken Crompton says there is still uncertainty over the less-hawkish FOMC minutes this week, which is why central bank speakers are out in force pushing the party-line for higher rates faster. There’s still a difference between the markets and the Fed on how quickly those rates will come down. Meanwhile, there’s still plenty of resilience in the US economy, with jobs not really coming down. As we saw yesterday, it’s the same story in Australia. The Euro saw a sharp fall today, as gas prices shot up to a record high. Canadian and UK retail numbers are out later – will they be a other sign of resilience in the face of adversity? Hosted on Acast. See acast.com/privacy for more information.

Thursday 18th August 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9Inflation clearly isn’t easing yet. The UK hit 10.1 percent in numbers released yesterday. NAB’s David de Garis says the sticker-shock of double-digit inflation set the cautious mood off early. But if hiking by central banks is designed to slow consumption it is taking its time about it. US retail sales were up 10.3 percent (YoY) in July. Can an aggressive path of hikes slow demand enough to stop inflation in its tracks? Will the RBNZ be the first to demonstrate success? And will the RBA need to pick up the pace, with some worrying signs in the wages data yesterday, even though the headline number seemed quite tame. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 17th August 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9Central banks continue to keep a close eye on wages data. The UK has just reported a drop in wages growth, alongside a fall in new jobs. We’ll see Australia’s wage growth numbers later today, which NAB’s Rodrigo Catril says shouldn’t be a big rise this quarter, but expect more in Q3 and Q4. Also today, the state of US retail, Canada’s rising inflation (despite all the front-loading of interest rates) and what to expect from the RBNZ. A busy day. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 16th August 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9The Aussie dollar has retreated from the gains at the end of last week, after a slowdown in China’s retail sales, industrial output and fixed asset investment. All grew well below expectations, as COVID continues to influence behaviour and, clearly, buying habits. We’ve also seen a big drop in oil overnight. NAB’s Ray Attrill says the fall is a combination of the weaker China data and signs that an Iran nuclear deal could be getting closer, which would see more oil pumped into the global marketplace. In the US equities continue to rise, even though the housing market is struggling, and the Empire State Manufacturing Index showed a massive (unbelievable) fall. The RBA minutes will be scoured today for any signs of the direction the bank will take now it is not, in their words, on a “pre-set path”. Hosted on Acast. See acast.com/privacy for more information.

Monday 15th August 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9There was a lot more positive sentiment around on Friday, because there are more signs that perhaps inflation is peaking. NAB’s Tapas Strickland says strong corporate earnings have helped, and a belief that the Fed will not be moving much further on rate hikes – even though many Fed speakers are keen to argue otherwise. It’s a different story amongst bond markets, were the 2-10 years spread remains firmly in negative territory, suggesting a recession or at least much slower activity for the remainder of the year. The RBNZ meets this week – Phil asks Tapas is they are being viewed as a test case for central banks, given that interest rates are likely to hit 3% this week, amid signs that the economy is slowing. Hosted on Acast. See acast.com/privacy for more information.

Friday 12th August 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9Markets are still behaving as though inflation will not reach the heights predicted by the Fed, and that the path of hikes will be downgraded. Softer PPIs in the US added to this sentiment. But NAB’s David de Garis says energy prices are the big concern. Brent is back over $100 a barrel, with concerns that European demand to substitute gas will push prices higher and add to inflationary pressures. But will inflation create a recession? GDP numbers in the UK today are expected to show a decline, yet unemployment remains persistently low, retail numbers are doing well and Dave says the streets of London are filled with people spending money. It doesn’t feel like a recession, whatever the numbers show. Hosted on Acast. See acast.com/privacy for more information.

Thursday 11th August 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9US inflation numbers were lower than expected, giving markets a major boost if confidence. Shares rose sharply, thew VUIX index fell to the lowest in quite a while, the USA dollar weakened, and the Aussie dollar was given a major boost. But will the enthusiasm last? As NAB’s Tapas Strickland explains, the falls were largely related to lower energy prices and the low-side core surprise was a payback for the high-side reading in June. In fact, the core reading is still rising and the Fed has made it clear they still have more work to do. So, can we expect markets to retrace their steps a little over the next day or so? Hosted on Acast. See acast.com/privacy for more information.

Wednesday 10th August 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9The long-awaited US CPI numbers are out today. NAB’s Rodrigo Catril most attention will be paid to the core reading, which excludes energy and food, the two factors which the Fed can have less influence over. If the core reading rises it shows the Fed has more work to do and that will only exacerbate recession fears. On that, we’ve seen the 2-10 yield spread falling ever lower to levels normally only ever seen ahead of recessions. China’s CPI and PPI reads will also be of interest today. There’s also discussion on today’s podcast on the NAB Business Survey yesterday – how can business indicators be so strong, whilst consumer sentiment is falling? Hosted on Acast. See acast.com/privacy for more information.

Wednesday 9th August 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9Markets are a bit in limbo today. We’ve seen bond yields reversing some of their initial response to non-farm payrolls, with the US dollar temporarily switching direction, and the Aussie and Kiwi dollars gaining strength. But for how long? NAB’s Skye Masters says what happens next will depend on US CPI numbers tomorrow. There was a glint of hope that the worst is over with slight decline in inflation expectations in the US and New Zealand. Certainly the NAB business survey will be scanned eagerly today for price movement. Hosted on Acast. See acast.com/privacy for more information.

Monday 8th August 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9The US non-farm payrolls numbers on Friday were certainly a surprise to many, with 528k new jobs created in July, twice the market expectation. Wages also rose further. Phil talks to NAB’s Ray Attrill about the swift market response, with many assuming the Fed will go for another big hike at their next meeting. US consumer credit numbers on Friday are also a forewarning of a difficulty period ahead for struggling housheolds. Meanwhile, Joe Biden’s Climate bill has just been passed by the senate – what impact will another splurge of government spending have on the Fed’s endeavours to bring down inflation. Speaking of which, US CPI is the number to look out for this week. Hosted on Acast. See acast.com/privacy for more information.

Friday 5th August 2022Markets continue to be pulled in two directions. Is inflation peaking with the hope of a soft landing? Or is there more to come, forcing central banks to lift rates high enough to spark a recession. At least the uK seems to have a clearer picture, but its not a good one. As NAB’s Gavin Friend discusses today, the Bank of England has lifted rates by 50 basis points, lifted their inflation forecasts and warned of five consecutive quarters of economic contraction. So, why is it so much worse in the UK than Europe? And could a change in Prime Minister change the outlook? He also talks to Phil about yesterday’s Australian trade data and looks ahead to tonight’s non-farm payrolls in the US. Hosted on Acast. See acast.com/privacy for more information.

Thursday 4th August 2022Nancy Pelosi has moved on from Taiwan and taken the cautious sentiment with her. Instead, very positive ISM services numbers in the US, and James Bullard talking about how the Fed will deliver ‘credible disinflation’, have seen the US dollar strengthen, helped shares bounce back and driven front end bond yields down. Today Phil talks to NAB’s Ray Attrill about what Bullard had to say, what to expect from the Bank of England today and whether Australia’s trade balance will actually increase, rather than the consensus view of a slight fall. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 3rd August 2022There has been some market caution this morning as Nancy Pelosi arrives in Taiwan, much to the disgust of China. Her rhetoric has been confrontational too, so what is the purpose of this visit? Fed speakers have been keen to shift US market sentiment away from the notion that there will be an easing in the path of rate hikes, with Mary Daly saying they are “nowhere near almost done”. NAB’s Tapas Strickland says there’s been a sharp rise in 2 year yields since, fully erasing the fall seen after the last FOMC meeting. The RBA raised rates as expected but is being cagey about where to next. On today’s podcast we look at the likely path to the end of the year, but is the market overly optimistic about how quickly rates will come back down? Hosted on Acast. See acast.com/privacy for more information.

Tuesday 2nd August 2022There were further signs of a looming recession, with the US manufacturing ISM weakening, the Caixin Manufacturing PMI also lower and retail sales in Germany falling the most in 50 years. Oil is also falling, and the 2-10 yield spread in the US is close to being the most inverted it’s been since the year 2000. You’d think although these recession signs at a time when central banks are still pursuing aggressive hikes would be enough to upset the markets, but NAB’s Rodrigo Catril says they clearly haven’t got the message yet, with equities showing only minor falls today. The only positive news of the day was that the first shipment of grain has left from Odessa, but it’s anyone’s guess how long that will last. The RBA meets today, a 50-basis point rise is expected, and an increase in the bank’s inflation forecast this week. Hosted on Acast. See acast.com/privacy for more information.

Monday 1st August 2022For those hoping that inflation was peaking (anywhere), then Friday didn’t bring good news. PCE numbers in the US are rising, Europe’s CPI is climbing higher, whilst manufacturing from China has slowed. Clearly, we’re not out of the woods yet, with former US treasury secretary Larry Summers saying on Friday that the Fed hasn’t reached a neutral rate yet, and the fact that Jerome Powell has said they have is just “wishful thinking”. So, what does this all mean for the RBA tomorrow. NAB’s Taylor Nugent says the expectation is there will be a 50 basis point rate hike, but Philip Lowe has spoken about a narrow path “clouded in uncertainty” – is there an outside chance he will see the need to move even faster as global inflation rates show few signs of easing? Hosted on Acast. See acast.com/privacy for more information.

Friday 29th July 2022US GDP fell by 0.9 percent in Q2. On top of the 1.6 percent fall in Q1 that meets the technical definition of a recession. But Jerome Powell and Janet Yellen are keen to point out the downturn is not sufficiently broad based to be called a recession. Nonetheless it does signify a further weakening in the economy, which investors seem to be taking as a sign that the Fed won’t need to be as aggressive to counter inflation. NAB’s Gavin Friend says that although the market may be trying to lead the Fed in that direction, that’s not how Jerome Powell sees it and we can expect to see further significant hikes. Perhaps the same could be say for the RBA, with Australian retail sales continuing to rise and Treasurer Chalmers yesterday predicting inflation will peak at 7,75 percent, well above the RBA’s 7 percent forecast. Hosted on Acast. See acast.com/privacy for more information.

Thursday 28th July 2022The FOMC has met, they’ve pushed rates up 75 basis points and, whilst Jerome Powell said there would be no forward guidance, he has hinted at another big rise next time. Of course, it all depends on the data. Phil Dobbie talks to NAB’s David de Garis about the take-outs from the press conference, which injected some animal spirits into the share market. They also look at yesterday’s Australian inflation numbers, and whether they have cemented in a 50-basis point rate rise by the RBA, or could it be more? Plus the Meta earnings release, which brought mixed news after the US market close. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 27th July 2022There gave been sizeable falls in US equities, mainly stemming from a cut to Walmart’s profit estimates. NAB’s Tapas Strickland explains how the rising price of food is leaving less money for people to spend on discretionary items, with more price increases to come. Meanwhile, Europe is hoping to cut gas consumption as Russia halves the supply of gas down the Nordstream pipeline. The EU has agreed a voluntary arrangement, but will be enough to build reserves for winter? Australia’s inflation numbers are out today – what will they be, and could they force the RBA to be more aggressive next week? The IMF has downgraded its global growth forecasts, noting an increasingly gloomy and uncertain outlook. Least but not least, the FOMC announces its rate decision just before tomorrow’s podcast. Tune in then for the full rundown, as it happens. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 26th July 2022From Wednesday one of two operating turbines on the Nordstream pipeline will be switched off, effectively halving the existing supply, taking gas provision to Europe down to 20 percent of full capacity. There’s no clear evidence that Europe has a coordinated plan to deal with reduced supplies, as EU member nations argue over the equality of calls for reduced consumption. NAB’s Ray Attrill says the threat of the full blown weaponization of gas supplies later in the year is still very much a live issue. Meanwhile, markets are treading water ahead of the FOMC meeting middle of the week, the US GDP read after that and Aussie inflation numbers tomorrow. There’s also a slew of major earnings results over the next few days. Hosted on Acast. See acast.com/privacy for more information.

Monday 25th July 2022PMI numbers were much weaker than expected on Friday, particularly for US services, which fell quickly into a contractionary read of 47.1. The composite read for Europe also fell below 50. Will this mean central banks ease off the rate-hike pedal a little? The opposite is expected in Australia. Rodrigo Catril explains how NAB believes the lower-than-expected unemployment rate last week cannot be ignored, and it’s likely the RBA will move faster over the next couple of meetings. Vladimir Putin continues to hold a strong grip on energy and food supplies, offering a re-opened gas pipeline with constrained supply, and reopened grain delivery routes, offset by attacks on their principal port of departure. It’s a busy week ahead, including the Fed meeting, and more inflation numbers. Hosted on Acast. See acast.com/privacy for more information.

Friday 22nd July 2022As we predicted the ECB lifted interest rates by 50 basis points yesterday, up to zero percent. NAB’s Ken Crompton says this was more than markets had expected and explains there was a short-lived reaction on the bond markets. There was also disappointment in the central bank’s anti-fragmentation tool, which now has a name and a new acronym! Right now it’s light on detail and will countries like Italy be able to meet the criteria being set for its use, even though, with rising spreads with German bunds, they are the ones who really need it. In the US weaker jobs claims gave job that the labour market might be easing. Coupled with weaker than expected manufacturing data, there’s always the hope that the Fed won’t need to be so aggressive. PMI data today will give a further indication of how services and manufacturing are travelling, in the US, UK and Europe. Hosted on Acast. See acast.com/privacy for more information.

Thursday 21st July 2022There’s some confidence in the markets this morning, despite what seems to be a compendium of bad news for Europe. NAB’s Gavin Friend says gas prices have fallen because Vladimir Putin has indicated that they will meet the reopening deadline for the Nordstream pipeline, but it’ll be at only 20 percent of its capacity. As discussed on today’s podcast, that might be enough to meet short term demand, but won’t allow Europe to build up stocks for winter. The ECB meets today and will outline plans for its anti-fragmentation tool. If markets aren’t impressed, it could bolster Italian bond yields, which have already pushed higher on growing uncertainty over Draghi’s tenure in the Italian parliament. We also look at what Philip Lowe said yesterday, ahead of August’s RBA meeting. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 20th July 2022Markets are preparing for a big rate rise by the ECB tomorrow. NAB’s Rodrigo Catril says they are hiking when the expectation is that the Nordstream pipeline won’t fully reopen for some time, if at all. “No energy means no growth”, he says, with the likelihood that Europe is heading for a major recession. Is the central bank prepared for that? Politically, can Europe cope with it all? Also today, we look at what the Bank of England’s Andrew Bailey had to say about UK rate expectations, ahead of inflation numbers later today. Plus, is the RBA preparing the market for a 75bps hike? And those flicking the off switch on Netflix - not as bad as expected. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 19th July 2022The resumption in gas supplies to Europe could well be delayed, but perhaps Russia has a legitimate reason. A bigger move this morning has been the rise in the price of oil which NAB’s Ray Attrill will in part be down to Saudi Arabia’s refusal to increase supplies. Equities have fallen slightly, in part because of reports that Apple are downgrading their hiring and growth plans. US housing continues to be under pressure, with more data today. We also hear from the RBA’s Michelle Bullock today, who might give away some indication of rate expectation, perhaps. Hosted on Acast. See acast.com/privacy for more information.

Monday 18th July 2022US equities rallied on Friday as data releases showed some resilience in the economy, but is it enough to stave off recession? Probably not, says NAB’s Tapas Strickland on today’s podcast, but it will be enough to put to bed any ideas of a 100 basis point rate rise by the Fed this month. Also today, China’s fall in GDP was worse than expected, with continuing lockdowns making the official forecast for the year completely out of reach. The focus this week will be on Europe: what if the Nordstream pipeline doesn’t reopen? And, with so much uncertainty, NAB is predicting the US dollar will remain stronger for longer, which is likely to keep the Aussie dollar below 70 US cents for some time to come. Hear more about that in today’s podcast too. Hosted on Acast. See acast.com/privacy for more information.

Friday 15th July 2022In a week of surprises (US CPI and labour market data, Canada’s interest rate rise, China’s lockdowns and the US$-Euro parity), yesterday saw a sharp fall in Australia’s unemployment rate. ‘It was our turn to surprise’, says NAB’s Taylor Nugent on this morning’s podcast. Unemployment has now fallen to a level below what the RBA was forecasting for next year, so does this mean we should expect a much larger hike at the start of next month? The big news this morning is the attempted resignation of Italian Prime Minister Mario Draghi, adding to the turmoil in Europe and adding to the US dollar strength. Next week is shaping up to be a turbulent week for the ECB, particularly if Vladimir Putin doesn’t turn on gas supplies as scheduled. Rising US PPI numbers added to the inflation story overnight. Today, US retail sales numbers are out, and the University of Michigan inflation expectations survey, which last month convinced the Fed to move rates higher. Hosted on Acast. See acast.com/privacy for more information.