NAB Morning Call

Monday 21st November 2022NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABFriday was unusually quiet, with no big data releases and not much movement in markets. As NAB’s Tapas Strickland observes, the most significant move was the reversal in short-end yields, taking the 2-10 yield spread to minus 70bps, the highest negative spread in over forty years. Normally this would be a clear signal of an impending recession, he says, but we’ve been seeing these signs for most of the year and yet the economy remains surprisingly resilient. The last week has also seen significant falls in oil prices – we look at why. And look ahead to the RBNZ this week. But it’s likely to be a quiet week, with the US celebrating Thanksgiving on Thursday.  Hosted on Acast. See acast.com/privacy for more information.

Friday 18th November 2022NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABAnother 32 thousand Australians had a job in October, making the labour market the tightest it’s been in decades. NAB’s Ken Crompton says this cements in the expectation that the RBA will lift rates by at least 25 basis points in December, continuing on in the first meetings of the new year. There’s less expectation of the Fed slowing down as well, thanks to James Bullard suggesting interest rates could rise as high as seven percent. That’s hit equities and pushed bond yields higher. In the UK the new Chancellor managed to issue a budget without a massive market response. Today Japan’s inflation numbers won’t be enough to convince Kuroda to move from the path of his ultra-easy policy but, as Ken, suggests, that could change when he moves on early next year. Hosted on Acast. See acast.com/privacy for more information.

Thursday 17th November 2022NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThankfully, World War 3 wasn’t started by that missile strike on Poland. Now markets are back to betting on how far the Fed will go, rather than NATO. As NAB’S Gavin Friend discusses yesterday’s US retail numbers shows greater resilience than anticipated, adding to the work of the FOMC to moderate demand. Moderating demand is less of an issue in the UK, where headline inflation has hit 11.1 percent and household pressures will be hit even more with a cost cutting, high taxing budget expected later today. On the home front, could the evidence of wage pressures yesterday be enough for the RBA to rethink any ideas of a pause in rates before Christmas? Hosted on Acast. See acast.com/privacy for more information.

Wednesday 16th November 2022NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABJust as we pressed the record button on this morning’s podcast news broke that Russia had fired missiles into Poland, a NATO m ember. As JBWere’s Sally Auld explains, until that point market sentiment had been very positive, as producer prices in the US eased, adding to expectations that inflation had peaked. The missile strike was a stark remainder of what was one of the major causes of the inflation I the first place and that conflict is far from over. Locally the Australian Wage Price Index is released today and is expected to show wage pressures are well contained, supporting the RBA’s policy of a more gradual approach to rate hikes compared to their overseas counterparts. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 15th November 2022NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABAfter the ebullient mood at the end of last week markets retraced their steps a little today, with shares on the rise and the US dollar regaining territory. NAB’s Rodrigo says Fed speakers, in particular Waller, have reminded the market that they will continue to lift rates until there are clear signs of a sustained drop in inflation. The question is, how determined will they be as we start to see more signs of a slowdown? The response to the easing of lockdowns in China seems to have persisted, with the Hang Seng strong yesterday and the Aussie dollar rising against a rising US dollar, helped by iron ore prices. And Presidents Xi and Biden have met and agreed to talk more. That’s another bit of good news ahead of G20. Hosted on Acast. See acast.com/privacy for more information.

Monday 14th November 2022NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThere was a trifecta of good news at the end of last week that sent equities rising, bond yields falling, commodities looking up and a chance for other currencies to gain on the US dollar at last. But will it last? That’s a question put to NAB’s Ray Attrill on this morning’s podcast. China announced some easing of COVID restrictions, Russia has backed out of Kherson and markets were still rejoicing with the fall in one month’s CPI read in the US. None of those translate to a fast track to a world that’s COVID free, with peace in Ukraine and price pressures alleviated. Could markets retrace their steps a little today after the euphoria at the end of the week, or will a positive meeting between President Xi and Biden later today add to the jubilation? Hosted on Acast. See acast.com/privacy for more information.

Friday 11th November 2022NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABUS core inflation dropped to 6.3% in October, below expectations and down from 6.6% in September. NAB’s David de Garis joins Phil to talk through the market reaction, which has seen stocks soar, bond yields fall and the US dollar taking a big hit. Does this mean inflation has peaked? Dallas Fed’s Lorie Logan called it a ‘welcome relief’ but the message from other speakers overnight is that there’s still a lot of work to be done. In Europe the central bank seems to be upping its hawkish rhetoric, whilst the UK is still stuck with the uncertainty of a shrinking economy and a budget next week that will be more painful than restorative.  Hosted on Acast. See acast.com/privacy for more information.

Thursday 10th November 2022NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABIt’s inflation day. The CPI print is out from the US late tonight Australia time. On today’s podcast NAB’s David de Garis talks about the impact if the number is a little higher than expected. The Fed’s John Williams said overnight that the news for the US is “mostly good”, suggesting longer-run inflation expectations have remained remarkably stable. No doubt his goal was to prevent an overreaction to the numbers tonight, which will be followed by a slew of other Fed speakers in the hours that follow. There’s also a discussion about China’s producer prices on the podcast. They’re falling. Could we see China started to export deflation again? Not if they keep locking cities down. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 9th NovemberNAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABUS equity markets have switched from being upbeat about the prospect of an end to China’s zero COVID to being upbeat about the outcome from today’s mid-term elections. NAB’s Ray Attrill also talks about the differences between Australian consumer and business sentiment and why the business outlook always seems a little rosier. He also discusses how one central banker at least reckons a recession will increase inflation, whilst there’s some hope that falling producer prices from China today might dampen inflation expectations a little, as more cheaper goods are shipped around the world. And Donald Trump has announced he will be announcing something important. Any idea what that might be? Hosted on Acast. See acast.com/privacy for more information.

Tuesday 8th November 2022NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABWe didn’t see the expected turnaround in markets on Monday. Yesterday on the Morning Call we talked about how Chinese officials had denounced speculation that they were heading away from the Zero COVID road soon, so we expected a reversal to some of the optimism in markets at the end of last week. On Monday though, as NAB’s Taylor Nugent discusses, US equities continued to rise, with the Wall Street Journal reporting again that a turnaround in China’s policy could still be on the cards. Perhaps. Well, the Chinese trade numbers yesterday were a clear demonstration of the damage being done to the economy. Today eyes will be on the US mid-term elections and, if there’s strong support for the Republicans, whether one Mr Donald John Trump will stand for the Presidency. In the more immediate future, markets are preparing for the US inflation numbers later in the week. Hosted on Acast. See acast.com/privacy for more information.