NAB Morning Call

Tuesday 2nd November 2021For once we are going into an RBA meeting unsure of what the outcome will be. NAB’s Ray Attrill says we have as much chance of predicting a winner in the Cup today as we do forecasting what direction the central bank will take. Meanwhile bond yields in Europe are being driven by the next central bank meeting – will the ECB abandon its PEPP program? Plus, more evidence of the great China slowdown. Hosted on Acast. See acast.com/privacy for more information.

Monday 1st November 2021There were more big moves in Australian bond yields on Friday as the RBA failed to buy up the April 2024 bonds that were the focus of its yield curve control (YCC) policy. So does that mean YCC is dead? NAB’s Rodrigo Catril says, yes it is. It has become dysfunctional, given the force we have seen from markets pushing front end yields higher around the globe. It should make for an interesting RBA meeting tomorrow, with more to come from the Bank of England the Fed. All are expected to confirm a policy shift. Meanwhile, evidence of inflationary pressures continue to mount, whilst China’s manufacturing is in contraction. Listen in as Rodrigo explains the rapidly evolving picture, for bonds, economic growth, jobs and inflation. Hosted on Acast. See acast.com/privacy for more information.

Friday 29th October 2021Three year bond yields rose well above the RBA’s target of 0.1 percent yesterday, but the central bank didn’t buy any up as part of its yield control. That pushed yields even higher. So will they react today? NAB’s David de Garis doesn’t think the bank will ditch yield control, but it’ll make next week’s policy meeting that much more interesting. Christine Lagarde said there was a lot of soul searching at yesterday’s ECB meeting, where the discussion was all about "inflation, inflation, inflation". In the end they reaffirmed that inflation was a transitory issue and there was no need for the bank to react. Yet Germany and Spain reported the highest inflation rates in decades. Are they doing the right thing? Meanwhile, equites are existing in a different world, rising still higher on the back of strong earnings results. And Facebook is changing its name. Listen in for more details. Hosted on Acast. See acast.com/privacy for more information.

Thursday 28th October 2021There have been sharp movements in bond yields, with front end yields rising and falls at the back end. NAB’s Gavin Friend says it reflects expectations that rising inflation will force central banks to raise rates sooner. We saw a higher-than-expected rise in Australian inflation yesterday and 2 year yields rose sharply overnight. Guy Debelle is in front of senate estimates this morning – will he still be arguing the transitory line? Bonds were also impacted by the Bank of Canada, who were more hawkish than expected, and by Rishi Sunak’s UK budget, which included forecasts suggesting a £50 billion drop in debt issuance next year. Tonight, the ECB meets and Q3 US GDP numbers are released. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 27th October 2021Former US Treasury Secretary Larry Summers took to Twitter yesterday to challenge Janet Yellen over inflation policy, suggesting the risk of losing control of it is higher than at any time in his career. Today, NAB’s Rodrigo Catril talks more about the rising inflation sentiment, with inflation expectations in the US now at a 13 year high. The expectation of a rate hike is being brought forward around the world, but the RBA (and NAB) are not expecting that to happen in Australia. Will this morning’s CPI numbers change that view? Hosted on Acast. See acast.com/privacy for more information.

Tuesday 26th October 2021The markets continue to be dominated by rising inflation concerns, including the price of oil. WTI got over $85 today, but has fallen back since. NAB’s Tapas Strickland tells how Saudi Prince Abdulaziz bin Salman has said it’s too early to up production whilst uncertainty prevails. There was an example of that uncertainty as another Chinese province went into lockdown. But equity markets aren’t concerned about such things. The S&P500 hit a new high as share rose on the back of strong earnings and higher commodity prices. And Joe Biden could be a step closer to having a scaled back version of his infrastructure package see the light of day. Listen in to find out why. Hosted on Acast. See acast.com/privacy for more information.

Monday 25th October 2021Comments from Jerome Powell added to the volatility in bond markets on Friday. The chair of the Fed reinforced that it was time to taper, but suggested rate rises would have to wait, with more than five million people who were working before the pandemic still unemployed. The labour market needs time to heal, he said. NAB’s Ray Attrill says it shows that he is less inclined to respond to inflation worries until bond purchases are unwound, unlike the Bank of England. Ray also points out how the PMI data for Europe, the UK and US was generally strong, suggesting that stagflation looks like likely. It’s a busy week ahead with the ECB and Bank of Canada meeting, Q3 CPI for Australia and lots of earnings announcements, including Facebook after Monday’s close in the US. Hosted on Acast. See acast.com/privacy for more information.

A sharp fall in commodity prices hasn’t dampening inflation expectations, and with it the assumption that central banks will bring interest rates forward. NAB’s David de Garis says it’s been a day when bond markets in particular have particularly been bitten the inflation bug, with pricing suggesting inflation will average three percent over the next five years, even higher in the UK. Two surveys highlighted that supply chain difficulties continue, the Philly Fed’s Business Outlook, and the CBI Optimism Index. The CBI survey showed that two thirds of UK businesses were complaining of supply shortages, the last time it was that high was in January 1975. Oh dear. Hosted on Acast. See acast.com/privacy for more information.

Thursday 21st October 2021Equities are rising to new highs as risk sentiment improves on the back of strong earnings results in the US, even though inflation remains an ever-present concern. NAB’s David de Garis says the Fed’s Beige Book, out this morning, highlights how many companies are convinced they can pass on their increased costs, with consumers paying through increased wages. If that’s the case has Jerome Powell been right all along, that inflation is transitory? It remains the subject of intense debate. The head of the Bundesbank has announced his resignation, citing personal reasons, but could it also be his objection to ECB’s delay in tackling inflation? And could the Bank of England’s plans by stymied as COVID infection rates start to rise again, quite significantly. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 20th October 2021US equities have had a strong session, although Procter and Gamble weas one of the first major household companies to highlight margin squeeze from supply chain difficulties. Netflix earnings are expected to be strong thanks in part to the success Squid Game. Meanwhile the tentacles of inflation continue to worry policy makers almost the world over – the RBA being one of the few exceptions. The UK CPI numbers are out tonight, but already it seems like a rate rise is (squid) inked in. Phil Dobbie asks NAB’s Ray Attrill whether the Bank of England could regret lifting rates, and whether the lack of movement in longer-dated bond yields suggests investors are thinking the same thing. Hosted on Acast. See acast.com/privacy for more information.