NAB Morning Call

Wednesday 2nd March 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9'What a night for market moves', says NAB’s Tapas Strickland, on today’s Morning Call. With no sign of an easing of the conflict in Eastern Europe, risk sentiment has risen sharply in the last 24 hours, with bond yields way down, oil peaking higher, the US dollar gaining strength and huge volatility on equity markets. Oil prices are rising even without export bans because trade houses are reluctant to touch Russian cargo. Today we look at how the uncertainty will translate to central banks. NAB’s Ivan Colhoun says the RBA continues to be patient, given that inflation is not as strong as elsewhere. Like all other central banks they will be factoring in the uncertainty from the war. The Bank of Canada might moderate their plans tonight on that basis, and Jerome Powell will be asked for his approach when he fronts up to the House Committee in the US later today.

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Tuesday 1st March 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9The sanctions against Russia are taking their toll on Russia, with moderate contagion to the rest of the world, but its early days. NAB’s Rodrigo Catril says the reaction in markets highlights how much more Europe is exposed, with increasing demand for US dollars. On today’s podcast there’s discussion about the impact on markets, who is exposed to risk, whether prices reflect an event which could rapidly escalate, the role China will play and the fate of the Aussie dollar in the midst of all this.

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Monday 28th February 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9There will be a shift back from the optimism of Friday, when markets were responding to the weaker-than expected sanctions being imposed on Russia. That’ll change today as access to the Swift system is denied to most Russian banks. NAB’s Ray Attrill says this, and the limitations on Russia’s central bank to make use of its foreign reserves, will have a profound effect on their economy. In today’s podcast he talks through the flow-on effects for other economies, including Australia and emerging markets. Can we expect a stronger US dollar for longer? And how will it impact the roadmap for central banks? And should we be seriously contemplating the risk of stagflation in the global economy?

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Friday 25th February 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9The Russian President surprised many with his broader attack on Ukraine yesterday. The UK Prime Minister called it Putin’s ‘squalid venture’, before announcing further sanctions, repeated by Joe Biden, including freezing more bank assets, stopping Russian trades in pounds and dollars, and ending a dependency on Russian oil and gas. The aim is to squeeze Russia out of the global economy, but that’s a long-term game in what could be a very short war. Today NAB’s Gavin Friend talks through the market impact, the influence of China, the inflation concerns and the likely response by central banks.

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Thursday 24th February 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9The Hitchhikers Guide to the Galaxy has the words ‘Don’t Panic’ emblazoned on the front. NAB’s David de Garis is more familiar with the words of Lance Corporal Jones, who frequently offered the same advice. It seems markets have taken that advice for now, perhaps because there’s been no significant deterioration in the Ukraine crisis. Still, oil prices are up, and equities are down, but the focus has, by and large, switched back to concerns about inflation. The RBNZ only lifted rates 25 basis points, but they have raised the terminal rate and expectations for a faster track this year. Australia's slower wage inflation came in as expected, supporting the RBA’s more patient approach, whilst more ECB members are getting nervous about inflation growth in Europe. Rising prices are hitting consumer confidence there.

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Wednesday 23rd February 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9The news over Ukraine overnight is confirmation from Putin that he supports separatists who want to take control over the wider Donbass region, which could see Russia invading further into Ukrainian territory. The market response so far has been fairly measured, but an escalation could see the West move beyond the current sanctions. One of those sanctions is shelving approval for the Nord stream 2 pipeline, which arguably hurts western Europe more than anyone. NAB’s Ray Attrill says the geopolitical uncertainty could dissuade the RBNZ from contemplating a half percent rate hike today. Australia’s wages data is out later today. Whatever the final number it will be well below the rises seen elsewhere, perhaps justifying the RBA’s more patient stance.

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Tuesday 22nd February 2022Will Putin’s declared support for separatists in the Donbass region be the false flag event the West has been concerned about? Does that mean an invasion is imminent? Market reaction hasn’t been strong so far, except for a rise in oil prices, but maybe that’ll change as the US returns from the President’s Day holiday. NAB’s Tapas Strickland says the actions overnight has certainly reversed the optimism yesterday, when a diplomatic solution looked more hopeful. Meanwhile, PMIs in Europe were really strong, which will add to the inflation pressures and could lead to a more hawkish ECB. US PMIs are out later on, and we’ll Christopher Kent from the RBA later today. What’s he going to say about QE and interest rates?

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Monday 21st February 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9There’s more uncertainty in the markets as tensions mount still further over Ukraine. Words from Biden and Johnson won’t help for the start of this week, alongside news that Russian troops on military exercises in Belarus are not going home anytime soon. NAB’s Rodrigo Catril says conflicts often have a short-lived impact on markets, but wonders whether this will be different, given the scale of it and the inflationary impacts it would have on Europe. Meanwhile, words from the Fed’s John Williams over the weekend have reduced the likelihood of a 50 basis point rate hike in the US next month. And for those looking of hard numbers there’s a plethora of PMIs, except the US, where it's President’s Day today. Plus why NZ bonds could be in demand.

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Friday 18th February 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9There are mixed signals in the markets today. Equities have taken a hit from continued uncertainty over Ukraine, but oil prices are down, perhaps because negotiators are close to agreeing a deal over Iranian oil. NAB’s David de Garis says many traders will also be assessing their positions ahead of a long weekend in the US. Yesterday’s FOMC meeting seems to have shortened the odds for a half percent rate hike from the Fed, although there’s been a lot of strong US data since that meeting. Words from the ECB’s Philip Lane have reinforced the idea that the bank is rethinking its position on holding off on rate rises. Today’s main stats are the retail numbers for the UK, which are unlikely to bounce back as quickly as we saw in the US yesterday.

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Thursday 17th February 2022View our disclaimer and terms of use: nab.co/3shJyypView our NAB Financial Services Guide: nab.co/3rvJtI9There are no signs of inflation abating just yet, or of Vladimir Putin pulling his troops from the Ukraine border. That means there’s more caution in the markets. On today’s Morning Call NAB’s David de Garis talks through the likely market response if Russia does invade and Biden responds with sanctions. Meanwhile, inflation is creating enough of a concern for everyone, with CPI up in the UK, South Africa and Canada, with rising US retail sales adding to the pressure in the US. In Europe a couple of ECB members are starting to get nervous about house prices. Only in China do they seem to have inflation under control, and the potential for more easing by the central bank. Whilst in Australia the Labour Market data will be the main focus this morning.

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