NAB Morning Call Lots to be thankful for
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Nov 27, 2025 Sally Auld, NAB's markets economist, dives into the optimistic economic landscape of Australia and New Zealand. She highlights unexpected gains in NZ's retail sales and strong business confidence following RBNZ easing. Auld also discusses Australia's robust private capital expenditure, reminiscent of the mining boom, and how this impacts interest rate expectations. Additionally, she examines the puzzling behavior of the Aussie dollar and touches on new lending regulations from APRA, painting a comprehensive picture of current market dynamics.
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AI CapEx Is Powering Australian Investment
- Private new CapEx in Australia surged 6.3% q/q, driven by plant and equipment and data-centre related spending.
- Sally Auld says AI-related investment is lifting non-mining investment and creating upside risk to GDP.
Growth Reduces Spare Capacity, Raising Rate Risk
- Strong investment and construction point to GDP running at or above trend, reducing spare capacity.
- A tighter economy increases the risk that the next move in rates could be up, not down, according to Sally Auld.
High Yields But A Stable Aussie Dollar
- Aussie 10-year yields reached about 4.5%, the highest in the G10, widening the spread over US Treasuries.
- Despite yields and stronger data, the AUD remains anchored near 65 U.S. cents for now.