NAB Morning Call

Tuesday 3rd November 2020Markets flipped from Friday’s share and bond sell-off, with more optimism a day or two out from what is expected to be a Biden victory. NAB’s Ray Attrill also points to very strong manufacturing numbers published for the US, which will have been an encouraging sign for investors too. Ahead of the US election though, there’s a Melbourne Cup to be won, and a decision to be made by the RBA, which will include rate cuts and more bond buying. Phil Dobbie asks Ray why the RBA needs to be taking such a strong stance when Australia is faring better than most places when it comes to tackling the pandemic.

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Monday 2nd November 2020After the markets finished with a strong equities and bond sell-off on Friday, expect a busy week, with the RBA, the Fed and Bank of England all meeting, with the difficult job of determining how to see the economy through rising infection numbers. Then there’s the non-trivial matter of the US election tomorrow. Will we hear the results by Wednesday? NAB’s Rodrigo Catril says there’s a very strong chance that we won’t. The big question for the RBA tomorrow, will be whether they announce an increase to QE at the longer end of the curve.

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Friday 30th October 2020Markets turned around again, with equities rising sharply. How much of it is the anticipation of Q3 tech company earnings results after the US close, how much of it is the strong bounce back in US GDP and how much is the anticipation of a clear outcome in next week’s US election? Phil Dobbie asks NAB’s Gavin Friend how he reads the market right now, and what are his thoughts on the ECB meeting which did little, but promised a lot more next time. Meanwhile virus numbers rise, there are more restraints on the economy in France and Germany – and could the UK be forced to go further next week too? Next week will be quite a week.

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Thursday 29th October 2020US equities have been hit hard today, the third day of losses, with the US dollar rising. NAB’s David de Garis said the markets hit the decks running as they opened in Europe, running away from risk. There’s growing concerns about the rising COVID infection rates, and, more significantly, rises in death rates in Europe and the US. Macron could be about to announce a significant lockdown of the French economy soon. Meanwhile, although Biden is still expected to win the US election next week, there are growing concerns about how clear the win will be, and whether President Trump will contest the result. If central banks have run as far as they can, the only injection for COVID-hit economies will come from fiscal measures. That was the gist of the message from the Bank of Canada, and is likely to be echoed by the ECB today. This morning the NAB business survey will give an invaluable read on expectations for Q3, whilst the US GDP numbers later on will show the extent of the country’s bounce back.

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Wednesday 28th October 2020There’s a risk that next week’s US election is more contestable than we might have considered a week ago. NAB’s Tapas Strickland says late surge polling could fall in the President’s favour. A poll in the US has also demonstrated just how many American’s would take to the streets if their preferred candidate didn’t win. Through rising COVID numbers into the mix, and it’s not surprising that the markets continue to struggle to find certainty right now. On the data front, US durable goods orders looked strong, as did industrial profits in China. And newspapers are reporting that Australia is heading out of recession on the back of the RBA’s Guy Debelle’s comments to Senate Estimates yesterday, but in reality his comments were more guarded than that.

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Tuesday 27th October 2020Markets are displaying classic risk-off moves today – with equities down, bond prices up and the US dollar the safe haven currency of choice. The reasons are clear – COVID cases continue to rise, a US stimulus won’t happen in a hurry and although the expectation of a Biden victory is clear there’s still the uncertainty of an election in a week’s time. NAB’s Rodrigo Catril talks through the moves, with the bad news overshadowing the good news – like Melbourne’s economy reopening tomorrow, and Astra Zeneca’s latest vaccine trial news.

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Monday 26th October 2020Last week finished with US stocks down, the US dollar down and the price of bonds down. Normally, if the sentiment is risk off and equities are down, you’d see the US dollar rise. The fact that didn’t happen demonstrates the US dollar is in a down trend, says NAB’s Ray Attrill on today’s Morning Call. Short term we can expect markets to continue to be influenced by election polls, Brexit hopes and COVID-19 statistics. The idea of a stimulus deal in the US remains a tiny glimmer of hope, but Nancy Pelosi might be the only person left hoping.

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Friday 23rd October 2020In a few hours Joe Biden and Donald Trump go head to head in the last election debate. NAB's Gavin Friend says equities have picked up some momentum later in the session, possibly not because of lingering hopes of a pre-election stimulus deal, but more on a Biden victory that could secure a more sizeable deal than would ever be agreeable to fiscally conservative Republicans. The UK has added more support payments for workers as COVID cases continue to rise, there and across Europe. A newspaper report claims Michel Barnier sees fish as the only sticking point for Brexit, which suggests a deal is closer than ever. And PMIs for Europe, the UK and the US will give an indication on to what extent the service sector has stalled in its recovery.

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Monday 22nd October 2020Talks are back on. Safter setting a deadline of Tuesday, Nancy Pelosi is continuing talks with the Republicans with a view to getting a stimulus package agreed for the US by the weekend. And after giving each other the cold shoulder for the first half of the week, the UK and EU are back to talking about a Brexit deal, meeting every day now until the issue is resolved. “This is the final run in”, says NAB’s David de Garis on today’s Morning Call podcast. If successful it could boost the pound, but the risk goes both ways. Meanwhile rising COVID numbers continue to cause concern and oil prices have taken a hit after a surprise rise in gasoline inventories in the US.

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Wednesday 21st October 2020Equities are higher in the US again today. NAB’s Tapas Strickland says it is largely on the back of continued hope that a stimulus deal will be struck. If not now, perhaps after the election with the possibility that the Democrats also win control of the senate. There’s also optimism around a vaccine and US housing data bounced back, showing more underlying strength in the US economy. Tapas is asked why US equites continue to significantly outperform those in Europe, Australia and other parts of the world. There’s also talk about the RBA minutes and yesterday’s Australian jobs data, plus the high demand for the ERU’s first ’social bonds’.

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