NAB Morning Call

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.