NAB Morning Call

Thursday 9th December 2021Even though equity markets have slowed, bond markets are still reflecting positive sentiment around coping with the Omicron strain. NAB’s Gavin Friend says Pfizer has confirmed views that three jabs will guard against serious illness from the new variant, and yet just now the British Prime Minister, where almost a third of the population have had three jabs, has introduced tougher measures to control the spread, including mask wearing at almost all indoor venues, working from home and vaccine passports for larger venues. The Bank of Canada has delayed acting on rising inflation and it seems likely that all central banks will sit on their hands this side of Christmas until more is known about the impacts of Omicron. Yesterday the RBA’s Philip Lowe said he didn’t expect the new strain to delay the recovery, but what makes him think Australia is so unique? Hosted on Acast. See acast.com/privacy for more information.

Wednesday 8th December 2021There’s a lot of positive sentiment around this morning. Equities are rising sharply in the US and Europe, oil is up and bond yields are rising. NAB’s Gavin Friend says it’s been driven by the efficacy numbers of a GlaxoSmithKline vaccine, and circumstantial evidence that the Omicron strain might not be that bad for those who have been jabbed. Data wise there were fairly in strong industrial production numbers in Germany, with Chinese imports picking up and the final GDP numbers showing a rise in European consumer spending. In other news, Janet Yellen has been channelling her inner Donald Trump when it comes to tariffs and tensions brew over Ukraine. And NAB’s Ivan Colhoun deciphers yesterday’s RBA meeting. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 7th December 2021US equites are roaring back, so is oil, with bond yields rising again. This newfound optimism has been driven by policy easing measures from China’s central bank, and less concern about the impact of the Omicron strain. It’s still too early to draw definitive conclusions on the virus, says NAB’s Rodrigo Catril, with reports from South Africa that there is a concerning rise in younger patients. Tougher measures on mandatory vaccines for workers could also ignite more protests that could have the opposite impact on take-ups, which could slow economies, particularly in Europe. Not much is expected from the RBA today, but the build-up of positive data is likely to force a policy change in February. Meanwhile, the jury is still out on the Bank of England next week, but market expectations around a rate rise are falling. Hosted on Acast. See acast.com/privacy for more information.

Monday 6th December 2021Markets were far more cautious on Friday. In part there are still concerns about the new Omicron strain, although circumstantial evidence so far is pointing to it being a milder variant. NAB’s Tapas Strickland says tech stocks were hit the hardest, because there’s growing acceptance that the Fed will push ahead with faster tapering, irrespective of tailwinds. Payrolls numbers were weaker than anticipated, but not enough to stop them, it seems. That raises the question, will central banks push ahead with tightening measures before economies have recovered to the detriment of the longer term outlook? Hosted on Acast. See acast.com/privacy for more information.

Friday 3rd December 2021Markets have displayed much mor epositive sentiment in the last 24 hours, but its not lasting. Gains in US equities have fallen away a little, and oil prices have risen sharply and fallen back again. NAB’s Tapas Strickland says Omicron news is mixed – it’s certainly spreading quickly but symptoms of those who are vaccinated appear to be mild. US Treasury yields have flattened further as more Fed officials pile on with calls for faster tapering. Oil prices fell sharply mid-session on the news that OPEC would lift supplies next month, but rose again on the news that they would pull back if demand falls because of Omicron. In short, another day of uncertainty all round. Hosted on Acast. See acast.com/privacy for more information.

Thursday 2nd December 2021Markets were choppy again overnight, but there is renewed hope with circumstantial evidence that the Omicron variant might be less severe. A WHO press conference suggested that existing vaccines will be enough to prevent many extreme cases, but we’ll still have to wait for the final verdict. NAB’s David de Garis says that was enough for the focus to shift a little to positive data reads out of the US, including a 534k rise in the ADP payrolls number an ISM manufacturing at 61.1 for November. Australia’s better than expected Q3 GDP number has done little to help the Aussie dollar – Dave suggests it has followed the fortunes of the S&P500. Today, the focus will stay with news around the virus and its impact on lockdowns and other contingency measures. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 1st December 2021You might have expected that Jerome Powell would use the uncertainty of the new COVID strain to downplay the need to adjust the speed of tapering by the Federal Reserve, but instead, addressing the Congress, he talked up the need for faster tapering, to be discussed at the next FOMC meeting. So, what’s brought about this character transformation? NAB’s David de Garis says he is clearly now far more worried about inflation. The ECB, meanwhile, is happy to keep using the transitory word and believes inflation has just about peaked. Meanwhile, China’s PMIs and prices paid gave a glint of hope that supply chain issues might be easing, albeit very slowly. But progress could be destroyed by the impact of measures to constrain the new variant. The future is as clear as mud and markets today reflect that uncertainty. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 30th November 2021On today’s Morning Call NAB’s Ray Attrill reminds us that the CSIRO’s Dr Rob Grenfell predicted, back in the middle of the year, that about now we would see a variant of COVID spreading from India or Africa. He now says the situation in South Africa is not a good comparator for Australia, and we should watch how it develops in Europe over the next couple of weeks. In the meantime, markets are playing a waiting game. There was a mild bounce back in equities, bond yields and the US dollar, but volatility will remain, driven by the news cycle. The other unknown is the impact this will have on the speed of a global recovery, with border shutdowns and the like, and the subsequent impact on inflation. Lots of questions for Jerome Powell and Janet Yellen then, in front of a senate hearing today. China’s PMIs will be the numbers to watch today. Hosted on Acast. See acast.com/privacy for more information.

Monday 29th November 2021There was a very strong market response to the news of the Omicron virus strain on Friday. Equities were hit hard, currencies ran for the shelter of safe havens and there was a sharp fall in bond yields. How much of this was a knee-jerk reaction amongst the thin trading on the day after Thanksgiving. NAB’s Rodrigo Catril says we can expect Asian markets to follow the US today, before markets settle down, but we can expect volatility for some time as we wait for news that helps assess the risk posed by this new strain. So, what does this mean for central bank tightening? Where will the Aussie dollar head through this turbulent time? What impact will it have on oil and inflation? Hosted on Acast. See acast.com/privacy for more information.

Friday 26th November 2021As America gobbles up Turkeys NAB’s Gavi Friend talks through the latest positioning on tightening by central banks. The FOMC minutes suggested a more hawkish approach, and the latest data would suggest that view has been reinforced, but there’s still a disconnect between what the markets expect and the messaging from the Fed. The Riksbank has started to talk about rate rises, but not before 2024. The Bank of England looked certainly to raise rates last month, but it didn’t happen and a rise in December is now looking less certainly. The ECB are continuing down a dovish path, reinforced by their latest minutes overnight. Meanwhile, the RBA is holding firm, even though the bounce back in jobs yesterday (with retail sales data today) suggests a recovery that most nations would be envious off. Hosted on Acast. See acast.com/privacy for more information.