NAB Morning Call

Thursday 10th June 2021Bond yields have fallen further overnight, in some cases to levels not seen for several months. NAB’s Tapas Strickland says it could be market positioning, although it could also be related to growing acceptance that any inflation that occurs is transitory. That’s not how the Bank of England’s Andy Haldane sees it though, and China’s PPI numbers shows supply costs are rising. Yet the RBA’s Christophe Kent sees any significant rise in inflation, temporary or otherwise, as being some way off for Australia. This mix of views on where inflation is heading globally will be fuelled further by the latest US CPI number out later today. Plus, what to expect from the ECB.

Hosted on Acast. See acast.com/privacy for more information.

Wednesday 9th June 2021Inflation fears have eased further, says NAB’s Gavin Friend, with bond yields pushing lower and market volatility easing. That’s despite the JOLTs (job openings) numbers in the US which were high enough for everyone to have a job, but its clear to attract workers companies will have to lift their wages. That was evidenced in the NFIB small business survey overnight too. Meanwhile, in the UK the focus is on rising house prices – BoE chief economist Andy Haldane described the market as “on fire” – and the worsening dispute with the EU on the Northern Ireland border. The Europeans are worried that British sausages could find their way onto the continent, stopping them could also mean the Northern Irish could be sausage-free. This is a story that won’t go away. It’s a slow burner, with lots of sizzle to follow (sorry).

Hosted on Acast. See acast.com/privacy for more information.

Tuesday 8th June 2021If the non-farm payrolls gave the markets a Goldilocks moment on Friday – with jobs numbers that weren’t too hot or too cold – then maybe markets are already starting to question whether it was exactly what was needed. As NAB’s Ray Attrill points out, US CPI numbers later in the week, and the expectations of them, could tip the balance a little. But, could the speed of recovery also be a concern? The US is showing growth, and it’s likely the JOLTs numbers today will show there are lots of job openings, but will they be filled? And why are China’s exports down? Could it be to do with supply constraints, or could it be lack of demand, particularly when much of Asia is facing increasing lockdowns and restrictions.

Hosted on Acast. See acast.com/privacy for more information.

Monday 7th June 2021Not too good, not too bad, that seems to have been the market response to the non-farm payrolls numbers out of the US on Friday. NAB’s Rodrigo Catril says it reinforced the view that the labour market was recovering in the US, but not so fast that it would prompt tapering discussions. The result has been a sharp fall in Treasury yields and a pick-up in risk assets. It’s a different story in Canada, but as discussed in today’s podcast, it’s all a question of timing and lockdowns. The G7’s agreement in principle to a 15% minimum corporate tax was another highlight at the end of last week, but there’s still a long way to go.

Hosted on Acast. See acast.com/privacy for more information.

Friday 4th June 2021On today’s podcast NAB’s Gavin Friend talks through a session that has been in two parts. First off there was the response to a series of strong numbers from the US, including a standout set of employment numbers from the ADP. This positive news added to speculation that the Fed would taper soon rather than later, with the Fed’s Robert Kaplan suggesting they might need to take their foot off the pedal sooner. Stocks regained some of their losses when reports emerged that Joe Biden might compromise on the size of his increase to corporate tax. Tonight the focus will be on the non-farm payrolls numbers out of the US. If they are strong then pressure will mount for a swifter move from the Fed. Or at least that’s what the markets will expect.

Hosted on Acast. See acast.com/privacy for more information.

Thursday 3rd June 2021If there’s one takeout from the Fed’s Beige Book overnight, aside from the continued improvement in the US recovery, it was the rising concern about input costs. Even though it’s seems to be accepted wisdom that price pressures from supply chain disruption will be transitory, there’s the question about how that disruption will impact the jobs recovery. NAB’s David de Garis says that makes this week’s non-farm payrolls on Friday particularly important, which explains why markets are lacklustre today, across almost all asset classes. Only oil is showing any significant move forward. Listen in for a description of how markets are travelling, just don’t expect any big numbers. Not today.

Hosted on Acast. See acast.com/privacy for more information.

Wednesday 2nd June 2021The RBA didn’t steer from its earlier stance that it was too soon to be looking at any changes in policy right now. Those who were expecting a more hawkish attitude will have been disappointed. The real surprise yesterday was the strength of the GDP partials in Australia, in particular a record current account surplus. NAB’s Rodrigo Catril says that will translate to a higher GDP number today. Elsewhere, Europe posted final PMIs for May, which have been revised upwards, and the US reported a high ISM manufacturing read. Hardly surprising then, that oil is on the rise, with Brent hitting pre-pandemic levels. But with India still in trouble, Iran ready to up their production, and uncertainty over lockdowns the world over, isn’t $71 oil a little premature?

Hosted on Acast. See acast.com/privacy for more information.

Tuesday 1st June 2021Markets have been understandably quiet with the US and UK on holiday. China delivered its PMIs, with the manufacturing read a little below expectations, and non-manufacturing a little higher than expected. NABs Tapas Strickland says the new orders component of manufacturing suggests demand might be starting to level off. The rising Yuan is clearly a concern for the PBoC who announced measures to tackle it, whilst Chinese authorities are now permitted families to have three children. Whilst Monday was quiet, there’s a plethora of data today, including pre-GDP partials for Australia, the Eurozone’s CPI, Canada’s GDP, US ISM, and China’s Caixin PMIs. Plus, of course, the RBA. No big announcements are expected but what will be the tone they adopt?

Hosted on Acast. See acast.com/privacy for more information.

Monday 31st May 2021It was an early start to month-end on Friday, with the US and UK off on holiday today. NAB’s Ray Attrill says there were a lot of intra-day currency moves late in the day on Friday, some of which will be down to asset managers managing their hedge ratios. There was little movement in other asset classes, even with a higher-than-expected inflation read, mainly because it wasn’t the same scale as the CPI shock earlier in the month. It might be a quiet start to the week, but it’s a busy week, including the RBA tomorrow and non-farm payrolls in the US on Friday.

Hosted on Acast. See acast.com/privacy for more information.

Friday 28th May 2021Three central bankers argued for a more rapid tightening of monetary policy overnight. The Bank of England’s Gertjan Vlieghe argued a scenario where rates in the UK could rise as early as Q2 next year, although NAB’s David de Garis says markets might have overreacted to what was a far more nuanced argument. The pound is the big winner in the major currencies overnight. The ECB’s Jens Weidman expressed concerns about monetary policy being pushed too far to tackle income distribution, whilst the Fed’s Robert Kaplan wrote an article outlining how the US labour market might be tighter than many have thought, with people stepping out of the workforce for early retirement, for example. Tonight, the Biden administration releases its budget papers, with forecasts, and the long awaiting PCE deflator – although with so much uncertainty around the transitory nature of inflation, or otherwise, there’s a question mark on just how valuable this read will be.

Hosted on Acast. See acast.com/privacy for more information.