NAB Morning Call

Thursday 14th July 2022US inflation has picked up more than expected, rising 9.1% in the year to June. The Fed’s Raphael Bostic said later that “everything was in play” when it came to a July rate rise. NAB’s David de Garis says, it doesn’t take a genius to figure out what he meant. The Bank of Canada (BoC) had just raised rates by 100 basis points, more than had been expected, so had that paved the way for the Fed? It certainly makes the RBNZ’s 50 basis point hike seem a little constrained. The UK GDP growth was, unusually, helped by trips to the doctor, rather than to restaurants. Locally, Australian labour market data will be studied closely. Can the jobs market tighten any more and add to the pressure for faster hikes from the RBA? Hosted on Acast. See acast.com/privacy for more information.

Wednesday 13th July 2022There’s no let-up when it comes to the downward expectations around the health of the global economy. US bond yields inverted further, suggesting a heightening of recession expectations. Oil prices fell sharply lower, suggesting demand is expected to fall further. US small business owners who expect conditions to improve in the next six months fell to minus 54%, the lowest in half a century. The confidence in the German ZEW survey hit a 10-year low yesterday. The NAB business survey also showed business optimism falling sharply. And NAB’s Gavin Friend reckons the prospect of an energy crisis in Europe is the real danger that is not yet fully reflected in market pricing. What will turn all this around? Central banks think a race to higher rates will fix the problem, with the Bank of Canada and RBNZ trying to outdo each other today on who can rate the fastest. So, imagine the reaction if US CPI numbers come out higher than expected today. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 12th July 2022There’s a more cautious tone in the markets today, with US equities falling, bond prices rising, and the US dollar continuing on the up and up. Sentiment hasn’t been helped today by more lockdowns in China as COVID cases flare up. Ironically, Yuan loans have increased a fair bit. NAB’s Tapas Strickland says this suggests, perhaps, that the economy will pick up once COVID cases have settled down. Meanwhile the Euro is very close to parity with the rising US dollar, as concerns grow about continuity of energy supplies. Already parts of Germany are starting to ration energy use. Hosted on Acast. See acast.com/privacy for more information.

Monday 11th July 2022It is a bit weird that positive US jobs data would be seen as heightening the expectations of a recession, but that seems to be the case. As NAB’s Ray Attrill explains on today’s podcast, the strength in the non-farm payrolls numbers of Friday did nothing to ease expectations that the Fed will continue with a rapid pace of rate hikes, and that could easily lead to a recession in the US. In Europe ECB speakers, like Robert Holtzman, are pushing for larger rate hikes even though rising energy prices (and shortages) are a very real prospect, with the next meeting this week. Meanwhile, recession prospects and a strengthening US dollar are playing havoc in emerging markets, as evidenced by the situation in Sri Lanka right now. Hosted on Acast. See acast.com/privacy for more information.

Friday 8th July 2022There have been slightly less recession concerns in the US overnight, with equities and commodity prices pushing higher and 10 year Treasury yields pushing back over 3%. Jobs have been front and centre, with weekly jobless claims not moving far, and non-farm payrolls adding more data to the picture later tonight. It’s been a torrid day in UK politics, with Boris Johnson resigning but not leaving Downing Street until a replacement is found. NAB’s Gavin Friend talks through the impact it’ll have on the UK economy. Whilst China is contemplating a massive spending spree for local governments to build infrastructure and get the economy back on track. Hosted on Acast. See acast.com/privacy for more information.

Thursday 7th July 2022The FOMC minutes are out, pointing to significant risk if inflation isn’t nipped in the bud. Markets are taking this as a sign that the Fed will lift rates more quickly, starting with a 50-75 basis point hike at the next meeting. This has added to concerns about the Fed inducing a recession, yet equity markets continue to climb. Phil asks NAB’s Ray Attrill whether the minutes are a little out of date, given the ISM read shows a fall in employment. We’ll get a clear indication of the jobless rate with initial claims for the US tonight. And Australia’s trade balance is the major release locally. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 6th July 2022The Euro is getting closer to parity with the US dollar. In today’s podcast NAB’s Skye Masters points out that the Markets team had forecast parity by the end of the year, but it looks like it wil happen much sooner than that. The big moves overnight, including a sizable fall in oil and copper, show recession fears are front and centre, even though there’s been very little data, and what there has been has not been particularly bad news. Skye says days like today, where there are some contradictory shifts, demonstrate the importance of looking at the trends and focusing on the bigger picture. Tomorrow could easily see a reversal of the moves we’ve seen today. The US share market had a wide trading range today, showing just how much uncertainty there is in the direction of travel right now. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 5th July 2022The RBA meets today and the NAB expectation is that they will lift interest rates by 50 basis points. Phil asks NAB’s Tapas Strickland whether, by seeing inflation rising slower than many other parts f the world, whether we’ll see a lower peak and hence, less work needed by the RBA. There seem to be lots of hope lately that inflation might be showing signs of peaking, but the war rages on and oil and food supplies are still heavily constrained. The most telling reality check is that Germany trade has fallen heavily into deficit, for the first time since 1991 (and even then, only relatively briefly). It could be worse still if Russia restrains supply even further. Hosted on Acast. See acast.com/privacy for more information.

Monday 4th July 2022Recessions fears continue to rise, pushing bond yields lower. As NAB’s Rodrigo Catril explains, the ISM manufacturing report in the US on Friday added to the fears, showing a contraction in new orders. It’s no longer an issue of supply constraints, demand is also softening. Yet inflation continues to rise. In Europe it grew from 8.1% year on year in May, to 8.6% in June. A big fall in copper prices also suggests an expected fall in demand. All this uncertainty is knocking the Aussie dollar down more than most currencies. This environment provides the ammunition for the RBA to make a large hike (50 basis points) tomorrow. Later in the week we’ll see if the tight labour market in the US is easing any, with the release of the monthly non-farm payrolls data. Prepare for a bumpy week again. Hosted on Acast. See acast.com/privacy for more information.

Friday 1st July 2022Yields are lower in the US and Europe as recession fears grow, prompted by weaker than expected personal spending in the US, with a very strong chance of a negative Q2 GDP, which would mean the US economy was in recession. Whilst you might hope less consumption would mean falling inflation, NAB’s Tapas Strickland days there’s little sign of it yet. It wasn’t just the US receiving bad news. There was a flurry of negative data for Europe, even before the EDB lifts rates, and a particularly bad activity outlook report from New Zealand. So, if the US, Europe, UK and New Zealand all go into recession, does that mean Australia will follow? Hosted on Acast. See acast.com/privacy for more information.

Thursday 30th June 2022Markets are confused as to where the global economy is heading. If investors were looking to the ECB Forum in Sintra for clarification, they will have been disappointed, with Jerome Powell confessing that recent experience has shown ‘how little we understand inflation’. NAB’s Gavin Friend says it doesn’t inspire you with confidence, when central banks are feeling their way. Meanwhile, all we can do is look for signs of softening economies, in the hope that falling demand will match up with lower supplies. On that basis a downward revision in US GDP could be seen as good news and Australian retail sales holding up the opposite side of the coin. There is a plethora of data today to add to the confusion, including the core PCE deflator, that the Fed has traditionally turned to as its measure of inflation. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 29th June 2022US equities switched direction overnight. NAB’s Taylor Nugent says it was a swift response to a weaker than expected consumer sentiment read in the US, with a particularly sharp fall in the expectations component. European yields are markedly higher today as Christine Lagarde spoke up the task at hand for the ECB, even though she continues to outline a hike of just 25 basis points in July. Today, Australian retail sales numbers are out, NATO continues to meet and the ECB forum in Sintra finally gets down to some meaty discussion. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 28th June 2022The volatility of the past few months means there is likely to be a greater need for rebalancing at the end of the quarter this time, says NAB’s Rodrigo Catril. Hence, we have seen a mixed picture overnight, with equities down, yields rising, the Aussie dollar suffering another fall and oil and iron ore rising in price, but each for differing reasons. Yet the overarching picture is one of uncertainty. Nobody is sure that central banks can combat inflation without instigating a recession, and nobody has a clear picture about how the Ukraine war will end. Once again, we try and map out a picture in the face of markets, geopolitics and data releases. Hosted on Acast. See acast.com/privacy for more information.

Monday 27th June 2022These are strange times. Market sentiment improved at the end of last week because of weaker consumer sentiment and a downward revision in consumer inflation expectations. The hope is this means that central banks will need to do less to curb inflation, which is reducing recession fears. But as NAB’s Ray Attrill says, that could all change tomorrow. Or today. The war in Ukraine is escalating and the G7 resolve to do more against Russia is increasing. Also today, what the RBA’s Philip Lowe said in Zurich last week, and the fate of the Aussie dollar? Hosted on Acast. See acast.com/privacy for more information.

Friday 24th June 2022There have been big movements in bond yields overnight. NAB’s Ken Crompton says there’s been a reaction to weak PMI data from Europe and the US. There were promising signs, though, particularly in Europe were rising inventory numbers suggest demand is softening and prices are weakening, which could lessen the need for aggressive hikes by the ECB. Nothing, it seems, will stop the Fed though, with Jerome Powell renewing his unconditional commitment to reducing inflation. Hosted on Acast. See acast.com/privacy for more information.

Thursday 23rd June 2022You take whatever you want from a senate hearing, so there have been mixed reviews of Jerome Powell’s performance in front of the Senate Banking Committee. Some picked up on his claim that the US economy was in a strong position, whilst others focused on his warning that a recession was a ‘possibility’. Phil asks NAB’s Gavin Friend if that’s why we’re seeing sentiment split, from positive moves in US equities for most of the session, to a less positive outlook amongst bond markets and commodity traders, with the Aussie dollar bearing the brunt of it. They also discuss UK and Canadian CPI, and look ahead to the barrage of PMIs today. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 22nd June 2022We’ve just had the longest night of the year in Australia but the markets are focused on the light at the end of the tunnel! There is a lot of positive sentiment today, with NAB’s Taylor Nugent point to strong growth in US and European shares across almost all sectors. So, does this mean there’s an acceptance, once again, that inflation can be tamed without a recession, or perhaps there’s a belief that a mild one would be acceptable. Certainly the RBA’s Governor Lowe is seeing the good times returning before too long, even as he talks up the need for more rate rises. He outlined three reasons we’ll see inflation fall next year. Listen in to find out more. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 21st June 2022RBA Governor Philip Lowe is talking at an American Chamber of Commerce event this morning in Sydney. Phil asks NAB’s Ray Attrill whether he could signal that interest rates could push higher than 2.5 percent, even though he said that was a possible level to reach on the 7.30 Report only last week. Certainly central banks seem to be drifting to more aggressive hikes, with one voting member at the Bank of England concerned that if they fail to follow the path of the Fed that could devalue the pound and add to the inflation woes. Today, with the US having spent Monday on their Junteenth holiday, markets are relying on central bank speak for direction, and there’s a lot of it over the next 24 hours. Hosted on Acast. See acast.com/privacy for more information.

Monday 20th June 2022It’s almost like there’s a race to turn up the rhetoric between central bank speakers, signalling to markets that rates will keep going up and the increments might be quite large. Klaus Knott from the ECB, for example, is talking about a possible series of 50 basis point hikes, which is a long way from the gradualism we’ve been hearing about for most of this year. This morning NAB’s Rodrigo Catril also talks about the fate of the Aussie dollar, which has been impacted by falling commodity prices which itself, is driven by recession concerns. It’s a quiet start to the week, with bond and equity markets closed in the US for Juneteenth. Hosted on Acast. See acast.com/privacy for more information.

Friday 17th June 2022The positive reaction to yesterday’s FOMC market was short lived, with a much softer US dollar this morning and big falls in equity markets. NAB’s David de Garis says some of the uncertainty comes from a surprise decision by the Swiss National Bank to lift interest rates for the first time in 17 years – and not by a little bit, but by 50 basis points. It’s unsettling for those who assumed they’d wait for the ECB before reacting. By comparison, the Bank of England went for a 25 basis point rise, exactly as expected, but suggesting they will act forcefully, in necessary. Just not yet. Data overnight was largely second tier, but none of it was particularly encouraging. We also take a quick look at yesterday’s Australian employment numbers too. Hosted on Acast. See acast.com/privacy for more information.

Thursday 16th June 2022The FOMC announced a 75-basis point rise in interest rates in the US, with rates rising to 3.4 percent by the end of the year. Sat the press conference that followed Jerome Powell spelt out that the next rise would be 50 or 75 basis points at the next meeting. They continue to argue that all of this can be achieved with a soft landing, but as NAB’s Ray Attrill suggests, when has a central bank ever confessed to contributing to a recession. There was also an emergency meeting of the ECB yesterday, as they try to tackle fragmentation in the European union occurring from rising rates. Later on the Bank of England, expected to lift rates by 25 basis points. Also today, Aussie employment numbers and New Zealand GDP. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 15th June 2022The FOMC meeting tomorrow morning (Australian time) has been the focus of intense speculation this week, with the surprise inflation numbers last week suggesting a more aggressive stance by the Fed. Some commentators are even pointing to a 100-basis point rise. NAB’s Rodrigo Catril says the dot plots from this meeting – showing the Fed’s own expectations of the path of rises – will be more significant than the rate decision itself. Meanwhile, Japan and China are struggling to constrain yields and the BoE faces an easier job as the UK economy slows itself down, without too much central bank intervention. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 14th June 2022There have been massive moves in financial markets since the release of the US inflation data on Friday. The US dollar is around the highest in decades, bond yields have shot up, in many cases to the highest in more than a decade, and the S&P500 has fallen to its lowest level in 15 months. NAB’s Tapas Strickland says the concern is we are seeing inflation expectations de-anchoring. In other words, is panic creeping to the markets? The concerns are heightened by the meetings of the Fed, the Bank of England and the Bank of Japan this week. The UK might not see big moves by the central bank, but only because the economy is already slowing and, after today’s GDP numbers, could well be the first into a recession. Hosted on Acast. See acast.com/privacy for more information.

Friday 10th June 2022The ECB indicated overnight that they will lift rates at their July meeting, and if there’s no sign of a fall in inflation then a bigger hike might be necessary in September. This is the most hawkish the ECB has sounded, but Phil Dobbie asks NAB’s Gavin Friend if it is enough? The prospect of more rate rises has accentuated concerns about the impact of southern European economies and Christine Lagarde’s proposals on how to deal with the problem failed to satisfy markets, with Italian and Greek bonds falling markedly again. Today’s CPI number for the US will be watched keenly. Has inflation peaked? Hosted on Acast. See acast.com/privacy for more information.

Thursday 9th June 2022There’s not much optimism in the air this morning. The OECD almost doubled their inflation expectations and slashed their growth forecasts, with the UK chosen for a particularly pessimistic outlook. NAB has revised its own forecasts for RBA rate hikes, outlined in today’s podcast. Oil prices have shot higher, with NAB’s Rodrigo Catril saying low inventories and the China reopening story means we haven’t reached the peak yet. The ECB meets later on. We know what to expect, although this is an environment where people change their minds at short notice. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 8th June 2022It was only a month ago that RBA governor Lowe was suggesting a 25 basis point hike was business as usual, with the bank wanting to signal that things would return to normal with a standard adjustment in interest rates. As NAB’s Ray Attrill points out, it was only a few months ago that the RBA was suggesting rates weren’t going up until 2024. Things changed sharply yesterday. This morning we look at the market reaction, from bond yields and equities, to the cross-rate with the New Zealand dollar. There’s also discussion on the ECB, with the potential for bond purchases in southern European nations who will be hit hardest from rate hikes. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 7th June 2022There’s been lots of action on the markets overnight, with rates pushing higher and, for most of the session, equities on the rise too. NAB’s Tapas Strickland says reopening news from China has helped push equities higher, but the prospect of rate hikes has seen that optimism diminish as the session neared the close. In currencies, the pound was the best performer in the G10, rising on the news of a leadership challenge for UK Prime Minister Boris Johnson. He won the challenge and the pound started drifting down again, but there’s no guarantee he’ll stay in his job for long. The RBA is the main focus today, with NAB expecting a 25 basis point rise. There’s less urgency and, with more meetings, greater flexibility than with other central banks. Hosted on Acast. See acast.com/privacy for more information.

Monday 6th June 2022It might be a quiet start to a busy week, with the RBA and ECB meeting, and the US releases its CPI numbers at the end of the week. NAB’s Skye Masters says there’s divided opinion on how far the RBA will push tomorrow – anywhere from 25 to 50 basis points. We know the ECB is moving slower, but we can expect they’ll give further signals about when rates will rise and by how much. It all depends on the inflation outlook, of course, with CPI for the US out on Friday. Meanwhile, markets have been looking for any evidence that price rises might have peaked, but with the uncertainty over oil, the war and China’s lockdowns, it’s a bold call to say we are there yet. Hosted on Acast. See acast.com/privacy for more information.

Friday 3rdJune 2022Today saw another session demonstrating the violent swings across all asset classes. Equities, that were well down yesterday, are well up this morning, despite an earnings downgrade from Microsoft. A chunk of the optimism comes from news that OPEC+ will increase oil production, even though oil prices themselves rose today. NAB’s Ken Crompton says we haven’t seen the same response in bond markets because of the likelihood that the Fed will keep rising, even beyond September, Lael Brainard said as much overnight. Tonight US non-farm payrolls will be watched keenly for signs of a softening job market or a reduction in wages. Hosted on Acast. See acast.com/privacy for more information.

Thursday 2nd June 2022If investors were looking for signs of weakness in the US economy, in the hope that it might moderate the expectations for a rapid path of rate rises from the Fed, they didn’t get it, says NAB’s Rodrigo Catril. Instead, the ISM manufacturing PMI for May came in higher than expected, job openings remained high and job quits haven’t really come down much. Nothing there to suggest the Fed needs to tread a more careful path, so bond yields have risen sharply and equities have fallen further. It’s a different picture in Australia, where a stronger GDP read is being taken as a sign that we might weather the storm better than most. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 1st June 2022The EU has agreed to an immediate ban on oil exported by sea from Russia, with a further ban on EU and UK insurance of Russian vessels exporting oil elsewhere. On today’s podcast NAB’s Taylor Nugent discusses the tightening of restrictions and the impact on commodity prices and Europe’s rising inflation numbers – which exceeded expectations overnight. Meanwhile, a meeting between Biden and Powell today, representing two supposedly independent entities, demonstrates the dichotomy between controlling inflation and avoiding economic hardship. Today’s Australian GDP numbers will demonstrate how we have it better than most with 0.7% growth expected QoQ – although that figure would have been higher without a higher negative trade balance. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 31st May 2022There isn’t much in the way of good news today, but that doesn’t seem to matter as far as equity markets are concerned. German inflation was a big upside surprise and other numbers out of Europe suggested things are perhaps worse than imagined. Oil is rising sharply and could well surpass the previous peak. The war in Ukraine continues unabated with Russia making further inroads in the east of the country. China is easing lockdowns, but for how long? Yet European shares rose the Futures suggest the US will open higher on Tuesday too. NAB’s David de Garis talks about markets are looking on the bright side of the downside. Hosted on Acast. See acast.com/privacy for more information.

Monday 30th May 2022Markets seem to be optimistic that the inflation wave can be ridden without us all crashing down on a rocky outcrop somewhere. So, are they right? NAB’s Ray Attrill joins Phil Dobbie this morning to discover the positive mood in the markets – particularly equities – driven by an absence of bad data and a hope perhaps that inflation will be tamed before central banks have to go the full way on interest rate rises. To what extent is demand holding up because people can dip into the extraordinary level of extra savings accumulated since the start of the pandemic. The non-farm payrolls data at the end of the week will be of interest, particularly in relation to wages. Locally, GDP numbers are out middle of the week. There are only three days this week when the US and UK markets are open, with month-end in-between. It could be a choppy week. Hosted on Acast. See acast.com/privacy for more information.

Friday 27th May 2022US equities rose sharply again today as more retailers gave positive outlooks, despite the earlier surprise form Walmart and Target. The optimism wasn’t impacted by another set of weaker data from the US. That presumably means there’s potential for damage if today’s consumption numbers surprise on the downside, or the PCI-deflator shows higher than expected inflation levels. As NAB’s Gavin Friend points out, the bond markets have not reacted the same way, positioned as they are for a series of rate hikes from the Fed and the question mark over a recession. The UK Chancellor Rishi Sunak tried to head off recession with the announcement of a large round of fiscal stimulus, funded by a one-off windfall tax on energy companies. But is it enough? And what happens next year? Hosted on Acast. See acast.com/privacy for more information.

Thursday 26th May 2022The increasing belief amongst central bankers – particularly in New Zealand and the US – is that faster rate hikes will have a more marked impact on fighting inflation, giving more flexibility on how to handle the issue later in the year. NAB’s Rodrigo Catril isn’t sure that a couple more 50 basis point hikes from the FOMC will be enough. Supply chain issues remain for goods, and consumers need to be torn away from their rising consumption of services. Today, Australia’s Q1 Capex numbers are worth looking out for. Also today, if the world seems a worrying place right now (particularly if you’ve been listening to George Soros), calm yourself down with a picture of a fluffy cat. It worked for our host. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 25th May 2022Yesterday’s upbeat sentiment was very short-lived, with a sharp fall in equities and bond yields today. A statement from Snap! about a worsening environment hitting revenue projections sent shares down across the board, but particularly advertising reliant tech stocks. That wasn’t the only bad news of the day. As NAB’s Tapas Strickland outlines in today’s podcast, there’s been a plunge in new home sales in the US, and a sharp fall in service PMIs in the UK. On the back of all of this, markets are expecting central banks to move a little slower on rate hikes, with the Fed’s Raphael Bostic warning policy makers to ‘proceed carefully’. We also look at the RBNZ decision today and Australia’s construction numbers this morning. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 24th May 2022A bounce back in equities and a better-than-expected IFO read from Germany. For today at least we’re seeing the return of some risk sentiment, as money piles into equities and bonds are sold off, pushing yields higher. NAB’s Taylor Nugent says there wasn’t anything obvious to prompt this risk turnaround, except perhaps some positive words from Joe Biden about the potential easing of tariffs with China. That might paint a happier long-term picture, but supplies from China remain an issue, with Beijing seeing an increase in COVID cases. Oil continues to be pulled in all directions, even as it becomes clear that Russian oil sanctions are having little effect. It’s PMI day today – perhaps we’ll see some upside surprises to add to the upbeat sentiment. Hosted on Acast. See acast.com/privacy for more information.

Monday 23rd May 2022Will a new government have any market impact? NAB’s Skye Masters has been looking at how markets behaved, relatively speaking, in the first few months of a new government. Irrespective of history ,the reality is, of course, that global concerns are far greater this time round, with markets pulled between inflation concerns and recession fears. The Fed’s James Bullard doesn’t think a recession is the on the cards for the US and thinks inflation can be beaten by next year if they push rates fast enough this year. The UK demonstrated that, despite price pressures and very low consumer sentiment, people are still shopping. It shows the importance of data right now, as we all try to grapple with the direction of economies the world over. Hosted on Acast. See acast.com/privacy for more information.

Friday 20th May 2022There was no bounce in equities today after the big falls we saw yesterday. NAB’s Taylor Nugent says its growing concerns about the US growth outlook, driven by earnings results and no uptick in economic data. Cisco has been the latest to downgrade their forecasts, blaming supply chains from the war and China’s lockdowns. But equity markets can normally see through short-term impacts, but not right now. Is the concern of over-reach by central banks part of the concern? And what does yesterday’s Australian employment data mean for inflation and the response from the RBA? There’s also a look at the minutes form the latest ECB meeting which ,again, highlighted the divide within the board about the need to act on inflation versus the impact on economic growth. Very much the question of the day. Hosted on Acast. See acast.com/privacy for more information.

Thursday 19th May 2022We’ve seen big falls in US shares as major retailers issue profit warnings, based on inflation and supply chain worries. Investors responded quickly. Had they forgotten that inflation was a thing? It was a timely reminder, says NAB’s Ray Attrill, that headline inflation hits consumer spending, so consumer staples and discretionaries will feel the pinch. The UK’s CPI hit 9 percent, but was in line with expectations. Canada’s inflation number was higher than anticipated, however. Australia’s wage growth remains relatively subdued, but the RBA’s focus will be on today’s labour market data. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 18th May 2022Equity markets have rallied today, buoyed by positive retail numbers for the US. But NAB’s Rodrigo Catril says the sentiment really improved in APAC yesterday on news that Shanghai will reopen after three days of zero COVID infections. Markets turned when the Fed’s Jerome Powell spoke about pushing beyond neutral to curb inflation, but shares rebounded soon after. Britain’s job numbers would look fantastic at any other time but now – instead, lower unemployment and rising vacancies spells out further inflation risks which will encourage the BoE to move faster, perhaps. Even the cautious ECB has one member talking about a 50-basis point rate hike. Today Australia’s wage price index will be watched keenly because it could be influential in the RBA’s next move up in rates. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 17th May 2022There’s been a fair bit of volatility in equity and bond markets overnight. Stocks are generally down after swings back and forth through the session. NAB’s Ken Crompton says there’s a continuing tension between the Fed talking up rate rises and whether that will prompt a recession. The data flow hasn’t offered anything encouraging. China’s retail sales were well down the NY State Manufacturing Index was pulled down by a fall in new orders, and the European Commission, understandably, lowered their growth forecasts and upped their inflation expectations. Meanwhile oil pushed higher and wheat prices ha e been hit by an export ban from India. Today US retail sales will show whether inflation is hitting demand yet and Christine Lagarde will have a chance to talk-up a July rate hike in Europe. Plus the minutes of the last RBA meeting. Hosted on Acast. See acast.com/privacy for more information.

Monday 16th May 2022There was a slight reversal in sentiment on Friday, with the US dollar losing ground, equities climbing and bond yields rising. NAB’s Tapas Strickland says news of the easing of lockdowns in Shanghai this week might have provided an excuse for this switch around, but news over the weekend could make this change in direction very short lived, with China relinquishing its staging of the 2023 Asia Cup (soccer). In Europe, Sweden and Finland have both announced they intend to join NATO. If that wasn’t enough to upset Putin, Ukraine won the Eurovision Song Contest. Today, eye swill be on China’s fixed asset investments, industrial production numbers and retail sales, and on the continuing debate about whether the Fed (or any central bank) can deliver a soft landing from the inflation battle without forcing a recession. Hosted on Acast. See acast.com/privacy for more information.

Friday 13th May 2022US equities continue to take a hit as inflation concerns continue and two of the biggest contributors – the war and China lockdowns – show no signs of abating. The war won’t go away, with Sweden and Norway now pushing for fast-tracked NATO membership. Reports suggest Beijing is now significantly in lockdown, which could further damage the Chinese economy and foreign trade. Here we are, says NAB’s David de Garis, wondering how low shares will go before we see anything like the Greenspan put come into play! A bigger worry for the UK is the cost of living, with March GDP numbers showing the economy retracted, and it will almost certainly be worse in April. Also today, we compare and contrast the direction of house prices in the UK and New Zealand. Hosted on Acast. See acast.com/privacy for more information.

Thursday 12th May 2022US inflation numbers didn’t fall as much as hoped, in fact the core number is up, making the job for the Fed that little but harder. There’s been a sharp response on the share markets, particularly for tech stocks, but less of a reaction in the bond markets. On today’s podcast NAB’s Skye Masters says there’s been a flattening of the yield curve, suggesting that the expectation is that the Fed won’t need to push further in its terminal rate. Meanwhile, Christine Lagarde has finally joined the ECB’s July rate-hike brigade, and the pound has taken a hit as Britain threatens to unilaterally pull out of a key component of the Brexit agreement with the EU, threatening a trade war. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 11th May 2022For a while today US shares were pushing higher, with tech stocks leading the way. Then as market close neared, prices started to fall and gains were effectively halved. NAB’s Rodrigo Catril says he is sceptical about hopes of a rebound, because the headwinds remain, particularly continued lockdowns in China, which will have a lag impact on the rest of the economy. How much of that lag will be reflected in US CPI later today? Meanwhile, the NAB business survey shows Australia is faring rather better than most of the world, right now. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 10th May 2022Markets are clearly concerned that there will be no soft-landing. There’s the big fear that rate rises won’t cut demand enough to compensate for inflation driven by supply chain disruption. The result, we’re seeing inflation expectations remaining high, stocks taking big hits and the US dollar possibly the only safe haven there is. So, what will turn this situation around? NAB’s Taylor Nugent says there has been no major data releases or news items to drive sentiment today, but risk-off uncertainty prevails. We have to wait for signs that inflation is starting to unwind. It might be way too soon, but signs of an easing of inflation in tomorrow’s US CPI would be very welcome. Hosted on Acast. See acast.com/privacy for more information.

Monday 9th May 2022Equity markets continued their falls on Friday, driven by concerns that the FOMC will let the economy slip into recession if it’s needed to keep inflation under control, just as the BoE warned last week. NAB’s Tapas Strickland says some Fed speakers have suggested a faster rate of tightening will be needed if supply chain difficulties aren’t corrected in a hurry. Given the China and Ukraine situations, that seems unlikely. Inflation concerns are rising everywhere. Even the ECB is expected to hike rates soon, and though the RBA’s path is somewhat slower than most there are concerns that they too might be underestimating the hit inflation could make and will need to correct quickly. All in all, a lot of investors will be looking eagerly for any signs that supply chain problems are improving. Hosted on Acast. See acast.com/privacy for more information.

Friday 6th May 2022Yesterday, as Jerome Powell gave the post-FOMC press conference, the US dollar strengthened, equities shot up and front-end bond yields fell sharply. Today, there’s been a swift reverse. The dollar is the highest in years, 10-year Treasuries are well over 3% and the share market has seen one of the biggest turnarounds ever. Does this suggest markets have a growing fear of a hard landing from the hawkish Fed rate path? NAB’s Gavin Friend says it is a challenging pathway for the Fed, but inflation will come down, hopefully, before causing too much turmoil in the economy. The risk to the economy was outlined by the Bank of England Governor Bailey, as they raised interest rates 25 basis points. Their forecasts make grim reading. And the Aussie dollar took a hit as risk sentiment soured. There will be a lot of interest in the projections in today’s Statement of Monetary Policy. Hosted on Acast. See acast.com/privacy for more information.

Thursday 5th May 2022The FOMC announced a 50 basis point rate rise for the US. As NAB’s Skye Masters notes in today’s podcast, the market response was fairly muted until Jerome Powell gave his press conference shortly afterwards. One comment, that they were not contemplating a 75-basis point rise, sent bond yields diving lower and equities shooting higher. Skye says markets had priced well ahead for a hawkish Fed, now they are taking some of that pricing back. But uncertainty hasn’t fallen away, with or inflation signs in New Zealand’s employment data, in Australian retail numbers and with another day of rising oil prices. We can expect a less hawkish Bank of England later, but it’s still likely they will raise rates even with the cost-of-living crisis being faced in the UK. Hosted on Acast. See acast.com/privacy for more information.