NAB Morning Call Bond yields sink as Fed bets rise
May 15, 2025
Ray Attrill, NAB's expert on market dynamics, dives into the drops in bond yields amid weaker retail sales and anticipations of Federal Reserve rate cuts. He discusses the curious independence of equities, bonds, and the dollar, while oil prices fluctuate due to potential U.S.-Iran negotiations. Attrill also examines Australia’s robust labor market and its implications for monetary policy, addressing the possibility of a more cautious approach by the Reserve Bank of Australia amid optimistic expectations.
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Tariffs Delaying Inflation Impact
- Producer prices not rising significantly suggests tariffs haven't impacted costs much yet.
- This supports expectations for the Fed to ease monetary policy further this year.
Weaker Consumer Spending Signals Caution
- Real consumer spending weakened entering Q2 after a strong Q1 boosted by tariff pre-buying.
- Fed easing depends on unemployment rising despite tariff impact being seen as temporary.
Iran Deal Could Boost Oil Supply
- Positive talks on Iran nuclear deal may lead to more oil supply, lowering prices.
- Iran could increase production significantly if sanctions lift, impacting global oil markets.