NAB Morning Call

Wednesday 17th March 2021There wasn’t much movement in shares, bond yields or currencies overnight, despite weaker retail numbers out of the US. It’s a different story for Australia with strong jobs data yesterday ahead of the official ABS Labour market data later in the week. NAB’s David de Garis says the RBA has suggested that many big companies have already made their adjustments on employment levels ahead of the end of JobKeeper, so there is a reduced risk of any sort of shock as the scheme closes. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 16th March 2021The fear of blood clots from injections means use of the Astra Zeneca vaccine has been suspended in an increasing number of European countries, slowing down the rollout, whilst the UK pushes ahead, reaching almost 40 percent of the population so far. This issue of lagging behind is not just impacting the economy, but is also playing into the strength of the Euro, says NAB’s Rodrigo Catril. Generally though it’s been a quiet session, with minimal movement sin bond yields, shares and currencies, ahead of the FOMC meeting later in the week. Hosted on Acast. See acast.com/privacy for more information.

Monday 15th March 2021Bonds yields rose sharply again on Friday, with 10 year Treasuries reaching their highest level since February last year. NAB’s Tapas Strickland says the inflation break-even component actually fell slightly, as the Michigan Consumer Sentiment survey showed inflation expectations had fallen slightly. Meanwhile the cyclical rotation theme continues as the vaccination rollout accelerates in the US and UK. It’s a different story in Europe, of course, with Italy returning to lockdown today as infection numbers rise sharply, with Germany heading in the same direction. The FOMC will be the main focus this week, along with Aussie retail sales and employment numbers. Hosted on Acast. See acast.com/privacy for more information.

Friday 12th March 2021Asset markets continue to be drawn by bond markets, says NAB’s David de Garis, on today’s podcast. With stimulus coming down the line, and jobs data showing further signs of recovery, you might have expected increased inflation concerns, but yesterday’s CPI figures seem to have calmed those concerns for now. But the ECB is still kicking into action, promising a faster bond buying spree under its pandemic emergency purchase programme, with Christine Lagarde concerned about the rate of recovery. Europe, of course, continues to suffer from a slow vaccine rollout – reaching 10% of the population in France so far, compare to 36 percent in the UK. Britain’s trade numbers will be interesting today, not because of COVID, but to se the impacts of Brexit on trade with Germany and the rest of Europe. Hosted on Acast. See acast.com/privacy for more information.

Thursday 11th March 2021The US 10 years notes auction this morning was a little softer than anticipated, but saw yields higher than last time. But NAB’s Gavin Friend says the story of the day was really the softer US inflation numbers, which saw yields pull back and helped stocks rise, with more rotation away from tech stocks. Meanwhile Philip Lowe from the RBA has been pushing back on market pricing, suggesting rates won’t rise until 2024, saying they would need to see wage gains sustainably above three percent. Whilst the RBA concerns are growing pains, the ECB has a different issue, says Gavin, because of their delayed response to the vaccine. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 10th March 2021Shares have reverted to a focus on tech in the US with a sharp rise in tech stocks. In fact, almost everything is a reversal on yesterday, with the US dollar weakening, the Aussie dollar strengthening, and bond yields falling. Chinese shares have stopped their decent, perhaps the alleged injection of cash from the government worked, for now. The expectation that the global recovery will be strong was reinforced by revised OECD forecasts and a record high for business confidence in yesterday’s NAB Business Survey. The inflation fixation right now means all eyes will be on the US and China CPI numbers tonight, as well as listening in to see what the RBA’s Philip Lowe has say on rising bond yields. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 9th March 2021Us Treasury yields pushed steadily higher overnight, reaching 1.6 percent for 10 year Treasuries. These higher rates have loosened the appetite for tech stocks in the US and Europe, with the NASDAQ falling further. NAB’s Rodrigo Catril says the speed of the rise in bond yields has taken markets by surprise, and a period of consolidation seems reasonable, particularly as the injection of the $1.9 trillion stimulus, which has prompted the rise, has been expected for some time. The Aussie dollar has been impacted, along with EM currencies. The Bank of England’s Andrew Bailey is perhaps the first central bank governor to highlight that an inflation fuelled rate rise is as much a risk as having to lower rates if the recovery is slower than anticipated. Talk about an each way bet! Hosted on Acast. See acast.com/privacy for more information.

Monday 8th March 2021The US senate has passed the $1.9 trillion stimulus package, so it will almost certainly become law this week. Phil Dobbie asks NAB’s Ray Attrill whether this will add to inflation concerns, particularly as oil is also racing ahead thanks to the OPEC+ decision last week to hold off on easing supply cuts. China’s trade figures over the weekend are another sign that the global economy is quickly getting back up to speed, as where US jobs numbers on Friday, although Janet Yellen has been quick to point out you shouldn’t jump to conclusions over the lower unemployment rate. Hosted on Acast. See acast.com/privacy for more information.

Friday 5th March 2021Bond yields are on the rise, in the US and in Australia – for very similiar reasons. Jerome Powell failed to reassure markets that the Fed had a plan to cope with rising yields. As NAB’s David de Garis explains, the Fed governor was saying the Fed had the tools to use if conditionals materially changed, just as conditions were materially changing! In Australia markets were clearly hoping for more bond buying from the RBA, so when they went returned to their previous buying level, markets were disappointed and bond yields rose again. All of this, of course, driven by inflation fears, for which a spike in oil prices hasn’t helped help. The timing couldn’t have been worse from OPEC+, who failed to agree on easing production cuts. Tonight we get non-farm payrolls numbers in the US and China’s National People’s Congress is on over the weekend. There’s a bit going on. Hosted on Acast. See acast.com/privacy for more information.

Thursday 4th March 2021Bond yield have been rising sharply overnight. This time it’s being driven not just by optimism about the speed of the global recovery, but also by the likelihood that the UK government will be issuing around £50b higher than the market expected. Chancellor Rishi Sunak has extended the furlough program through to September, along with other assistance measures. This latest jump in yields couldn’t be timelier with Jerome Powell speaking later today, no doubt reiterating the point that the Fed sees no reason to be concerned about inflation. US jobless claims will also be of interest later on – they were down last week, but the ADP employment numbers told a different story last night, with fewer jobs around. Hosted on Acast. See acast.com/privacy for more information.