NAB Morning Call

Friday 23rd June 2023NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThe Bank of England and the Norges Bank both surprised markets, each raising interest rates by 50 basis points. NAB’s Gavin Friend says the mix of higher UK earnings and stubborn inflation numbers yesterday combined to drive this bigger than expected move. The question is, how much further will they go as the UK fights supply chain and labour supply issues and second-round effects? Certainly Jerome Powell is painting a less volatile path for the US economy, where further rate rises will come slowly, if at all. Yet yields are climbing higher again with all this central bank uncertainty, and oil prices have fallen sharply on an expected decline in demand. Hosted on Acast. See acast.com/privacy for more information.

Thursday 22nd June 2023NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABAt his testimony to the House Finance Committee overnight Jerome Powell suggested two more rate hikes would be a “pretty good guess”. But, as NAB’s Taylor Nugent points out, markets haven’t even fully priced in one more hike for the remainder of this year, so they clearly don’t believe him. It’s a safer bet that the Bank of England will raise twice, or maybe one big hit today, as they prepare to counter yesterday’s inflation numbers that showed the downward movement in the headline rate has stalled, and the core rate continues to push higher. Not a happy place. And they lost at the cricket. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 21st June 2023NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThe Aussie dollar has dipped to 67.8 us cents this morning. NAB’s Tapas Strickland says its in part because of the China slowdown story, but also the RBA minutes which were more dovish than expected? Does this mean a pause is more likely, or will recent data suggest otherwise? The RBA’s Michelle Bullock gave a speech yesterday indicating the importance of seeing unemployment getting back up to a non-inflationary level, suggesting more emphasis will be placed on jobs data. The UK gets its latest CPI data today ahead of the BoE tomorrow. An upside surprise could mean a 50bp rise by the UK’s central bank. And Jerome POweell spends a day in front of the US House Financial Services Panel later on. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 20th June 2023NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABWe are a couple of days out from the next Bank of England meeting, where a rate hike of at least 25bp is expected, with more to come – but could it be 50? So, is there a danger of doing too much? Phil asks NAB’s Skye Masters whether the aggressive signalling from central banks is intended to modify behaviour without expecting to go quite as far as they are suggesting? The mood overnight was subdued, wit the US on holiday, but impacted a little by more cautious expectations for the Chinese recovery. Hosted on Acast. See acast.com/privacy for more information.

Monday 19th June 2023NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABWith the US on holiday, very little new data and not much out on Friday, today should be a very quiet day. But, as NAB’s Ray Attrill suggests, that doesn’t mean there won ‘t be fireworks later. Jerome Powell fronts up to two days of testimony, and the Bank of England will lift rates shortly after receiving the latest CPI print. Given a weakening US dollar could we see further strength in the Aussie, plus a brief discussion about an AFR article this morning suggesting the RBA might be preparing for QT. Hosted on Acast. See acast.com/privacy for more information.

Friday 16th June 2023NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThe ECB hit expectations with their rate rise overnight, says NAB’s Ken Crompton. Markets have responded to Christine Lagarde’s clear expectation that there will be another rise at the next meeting. So, we have a slowing economy (technically in recession) with a central bank lifting rates. In the US, where the Fed has also signalled one or two more rises, we saw weaker data overnight, raising the question, will they actually have to go that far? Whilst in Australia the tight labour market – made tighter with higher job numbers yesterday – adds to the challenge for the RBA. And in China, the slowdown is set to promote more fiscal and monetary stimulus. Could that help push the Aussie dollar back into the seventies? Hosted on Acast. See acast.com/privacy for more information.

Thursday 15th June 2023NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABFew will have been surprised by the decision of the FOMC to pause interest rates, after 10 successive hikes. But they have also signalled that rates could rise as much as 50 basis points, with one member wanting to see rates go over 6 percent. JBWere’s Sally Auld talks to Phil about the decision and take-outs from the press conference that followed. One thing is clear, although the pause was a unanimous decision the dot plots show the board members have wildly different expectations of where to go from here. The ECB is not ready to pause yet. And the next move by the RBA will be to some extent impacted by today’s employment numbers.  Hosted on Acast. See acast.com/privacy for more information.

Wednesday 14th JUne 2023NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThe CPI numbers from the US yesterday showed core inflation is roughly in-line with expectations, raising hopes that the FOMC will pause rates at their meeting on Thursday. Shares are higher in anticipation. It’s a different story in the UK tough, where a tight labour market continues to cause problems. Yesterday’s employment data saw unemployment fall, whilst wages increased further. NAB’s Taylor Nugent says two-year yields in the UK shot above the level reached during the brief Liz Truss premiership, when the BoE had to step in to protect pension funds. Somewhere in between, sits Australia, where yesterday’s NAB Business Survey with clear signs of a slowing economy. But, of course, that’s good for controlling inflation.  Hosted on Acast. See acast.com/privacy for more information.

Tuesday 13th June 2023NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABIt’s a busy week ahead, with the Fed, the ECB, the Bank of Japan all meeting, and not a clear picture of what any will do in terms of rate rises. The Fed’s decision might be partially impacted by US CPI numbers out today. NAB’s David de Garis says there is talk of a skip, rather than a pause. In other words, one meeting missed so economic indicators can play catch-up before the Fed returns on its upwards rate path. Meanwhile, there seems to be an increasing amount of softer data, suggesting slowdowns are starting to occur. It’ll be interesting to see if UK jobs numbers fall back because, despite concerns about UK growth, employment numbers have been holding up. Is tis the day they turn? Hosted on Acast. See acast.com/privacy for more information.

Friday 9th JUne 2023NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThe US dollar has fallen a fair bit, with bond yields down and equities boosted, following a higher than expected jobless claims number in the US. NAB’s Gavin Friend says the markets are reversing some of the early responses to the double shock of rate rises by the RBA and the Bank of Canada. Clearly, the job claims number was used as an excuse to show an economy slowing. But is it an over-reaction? It is if other markets show an equal degree of economic slowdown, which arguably, Europe has done by recording a technical recession in the latest GDP revision. Hosted on Acast. See acast.com/privacy for more information.