NAB Morning Call

Monday 4th May 2020

May got off to a bad start on Friday with falls in equities and the Aussie dollar the worst currency on the day. NAB’s Ray Attrill says it signals the start of a more measured month. April saw the best month for US equities since 1987. That’s not going to happen again, particularly with more uncertainty thrown into the mix as President Trump threatens China with hefty tariffs, given his belief that the virus started in a Wuhan laboratory. So how will the Aussie dollar respond to a week in which the RBA meets and the size of US unemployment is revealed, in Friday’s non-farm payrolls.

Friday 1st May 2020

Month-end has seen a broad sell-off of the US dollar says NAB’s Gavin Friend in today’s podcast. We’ve also seen equities hit, in part because of more bad indicators, incuding further unemployment claims in the US. Growth numbers from Europe also looked bad, with the ECB extending its low cost loans for banks to pass on to businesses, but we’re still waiting for grants – not loans – from the EU. The markets also seem to have reassessed optimism around the US government’s fast tracking of Remdesivir trials, as a possible cure for COVID-19.

Thursday 30th April 2020

The Fed unanimously kept interest rates on hold at near zero levels, whilst warning that the economic risk in the medium term was unprecedented. David de Garis discusses Jay Powell’s remark that the Fed’s powers are limited to monetary policy, a suggestion perhaps that the White House should be doing more on the fiscal front. In Europe the job is even bigger, whilst at home in Australia we could be amongst the first out of a lockdown. Are we already starting to see the relative strengths of post-virus economies, whenever that is?

Wednesday 29th April 2020

The Aussie dollar has been steadily rising, now around 65 US cents. Phil Dobbie asks NAB’s Ray Attrill whether it’ll last, or even push higher. They also discuss the markets continued optimism that the impact of COVID-19 will be short-lived, with equities pushing higher again today. But with entire industries struggling – airlines in particular – have fiscal policies gone far enough. Is there more central banks can do? Will the Fed, for example, announce anything more tomorrow. Meanwhile, the New Zealand dollar has lost ground over speculation that the RBNZ may push interest rates into negative territory.

Tuesday 28th April 2020

Again, it seems markets are ignoring the bad data, of which there’s plenty, and optimistically looking to businesses returning to normal. The continued, unprecedented action by governments and central banks has added to the optimism, with the Bank of Japan pulling out more stops yesterday. But is Australia in the box seat? It’s a question Phil Dobbie puts to NAB’s Tapas Strickland as, again, the Aussie dollar is one of the best performing currencies. Plus, oil, falling by a quarter. Are you getting that déjà vu feeling again?

Monday 27th April 2020

US Treasury Secretary Steve Mnuchin spoke of the US economy re-opening in May and June, with a rapid recovery in the few months that follow. But, NAB’s Rodrigo Catril says equities are facing resistance to any further rises – the bullish sentiment may have subsided for a while. Phil Dobbie asks whether bonds are likely to respond more to the prospect of deflationary pressures, with lower cost oil and continued subdued consumer demand. But will Australia fare better than most and give further strength to the Aussie dollar? And it’s an important week for central banks, with the Bank of Japan, the Fed and the ECB all meeting.

Friday 24th April 2020

In today’s podcast Phil Dobbie asks NAB’s David de Garis, ‘what’s going on?’ US unemployment registrations have added another 4.4 million, European PMIs hit record lows and the EU failed to reach an agreement on how to fund a recovery package for Europe. Despite this, oil prices have rebounded, and the US stock market is trading at levels we were seeing early last year, when the idea of the economy taking such a global hit was unthinkable. There’s still only one question that remains, of course – when will it end?

Thursday 23rd April 2020

Oil prices have calmed down a little and equities have risen again, but not much has changed. Oil inventories in the US continue to rise, Steve Mnuchin has said it’ll take to the end of the US summer to see there economy back in operation and Corona virus stats out of Europe are taking along time to slow. On today’s podcast NAB’s Gavin Friend also talks about the meeting of EU leaders tonight/tomorrow – could this be the opportunity for Corona bonds to be resuscitated? And the ECB looks set to follow in the Fed’s footsteps, buying high yield bonds. Plus, a bunch of PMIs out in the next 24 hours – will they tell us anything we don’t already know?

Wednesday 22nd April 2020

Oil rout spills over and sours risk sentiment across the board. Phil Dobbie talks to NAB’s Rodrigo Catril about the impact on the markets and the economic outlook from this crash in oil prices, with Brent also showing big falls today. There’s also some discussion about the latest corona virus statistics, why the pound and the NZ dollar have fallen so far today, some confidence emerging from Europe, what to expect from Australian retail sales numbers today and how useful are they anyway?

Tuesday 21st April 2020

Yesterday on the Morning Call we raised the prospect of oil prices lurching into negative territory. This morning, that’s exactly what has happened for WTI, with a vengeance. Phil Dobbie talks to NAB’s Ray Attrill about why this happened and the impact on other sectors – which has actually been fairly constrained. There’s also discussion on government stimulus measures – including signs that the furloughed worker approach is working – plus, words from the RBA Governor today and the New Zealand easing of restrictions.