NAB Morning Call

Thursday 19th December 2019

It’s beginning to look a lot like Christmas, with not much movement in currencies or equities. As NAB’s Gavin Friend tells Phil Dobbie, we’re finishing the year on a high, with markets taking a positive view of the year ahead. The US 10-year Treasury yield curve is now the steepest its been since July. Equities are at or near all time highs. Even Europe showed signs of turning ahead, with better than expected IFO numbers. The pound has been held back by no-deal Brexit fears, but they could subside as the new PM pushes on with negotiations. The world is in a very different place to the run-up to Christmas 2018.

Wednesday 18th December 2019

There’s no getting away from it. The pound took a hammering after Boris Johnson indicated the end of 2020 will be a firm deadline for Brexit, deal or no deal. The Aussie and NZ dollars also lost ground. In today’s podcast Phil Dobbie asks NAB’s Rodrigo Catril why this is, particularly as New Zealand had improved confidence numbers yesterday and home loans in Australia had an up tick. The US economy continues to show positive signs, with manufacturing and industrial output exceeding expectations, but CBI numbers showed a big fall in manufacturing in the UK. In short, one country seems to be faring somewhat better than the rest.

Tuesday 17th December 2019

There’s been feverish activity in equity markets over the last 24 hours as investors respond to the US-China trade deal and the removal of Brexit uncertainty (for now). Phil Dobbie asks NAB’s Ray Attrill whether share markets could be in a melt-up. They also discuss movements in bonds and currencies as markets readjust to the news, and take-in the latest disappointing PMI data from Europe. But could circumstances change all that? The same question can be asked in Australia – does the government need to introduce a fiscal stimulus package - they haven’t so far – or will the economy pick-up?

Monday 16th December 2020

Two of the biggest obstacles to global economic growth have seemingly been removed, or at least sidestepped for a while. Yet the market reaction to the announcement of a US China trade deal wasn’t as pronounced as you might expect, and the initial exuberance in Sterling fell back a little despite the enormity of Boris Johnson’s electoral victory and the certainty of a Brexit by the end of January. Phil Dobbie asks NAB’s Tapas Strickland whether both outcomes had already been priced in, or are investors still cautious in case things turn bad again. Plus, why the Aussie and Kiwi dollars took the hardest knocks on Friday, and the numbers to look out for today, including a fair bit of data from China.

Friday 13th December 2019

Two significant deadlines today means, whatever happens, we can expect some volatility. The markets have surged on a potential breakthrough in US-China trade talks, much of the hope based on a tweet from President Trump and a subsequent report from Bloomberg that the deal now just needs the President’s signature. Secondly, UK polls close soon and the immediate exit polls will give a clearer picture of whether Boris Johnson will be able to push ahead with his Brexit deal, or whether a hung parliament will lead to continued uncertainty. Phil Dobbie asks NABs Gavin Friend what he expects to happen today – on both these events – and how the markets could react. Plus, a look ahead to US retail sales, on the back of the very strong non-farm payrolls last week.

Thursday 12th November 2019

The Fed has announced no moves on rates in the US, with no expectations for cuts in 2020.. Phil Dobbie asks Rodrigo Catril for the take-outs from the FOMC statement. The next central bank is the ECB tonight, but the decision is expected to be the same. The Brits go to the polls today, with Sterling holding up even though an MRP poll raised the prospect of a hung parliament and all the ongoing Brexit uncertainty that entails. Uncertainty remains over trade talks – could the hope of pushing back the tariff increase scheduled for this weekend be off the table? And the Aussie flying high today, even though the mood in the US seems more risk off than risk on. Plus, the biggest ever share listing. Another busy edition of The Morning Call.

Wednesday 11th December 2019

After a busy start to the week markets have calmed down overnight, in a wait and see mode ahead of a series of events this week that could have some influence. Phil Dobbie suggests to NAB’s Alex Stanley that there is a very slight risk-off sentiment, with uncertainty mounting over the outcome of the US China trade talks, ahead of the weekend deadline. Alex also mentions the BIS Quarterly Review, which discussed whether the stress experience din the US dollar repo market has eased since September. And the NAB Business Survey is out today. Last time forward looking indicators showed a glimmer of hope that conditions might be stabilising a little, but with business confidence and conditions well below the long-run average for most of this year there’s still a fair way to claw back.

Tuesday 10th December 2019

Markets have been calm overnight, in wait and see mode ahead of a series of more important events this week. Phil Dobbie suggests to NAB’s Alex Stanley that there is a very slight risk-off sentiment, with uncertainty mounting over the outcome of the US China trade talks, ahead of the weekend deadline. Alex discusses the outlook for bond yields and the potential for year-end pressures in short term USD funding markets. The NAB Business Survey is out today. Last time forward looking indicators showed a glimmer of hope that conditions might be stabilising a little, but with business confidence and conditions well below the long-run average for most of this year there’s still a fair way to claw back.

Monday 9th December 2019

Jobs numbers from the US on Friday were well above expectations and, as NAB’s Ray Attrill explains in today’s podcast, we saw a swift response in the markets. The weekend saw a fall in China’s exports, at a time when Christmas demand would normally be boosting demand. Phil Dobbie asks whether President Trump will see this as further evidence that he has the upper hand and could that mean the phase one trade deal could slip into next year. There’s also discussion about what came out of OPEC last week, and the busy week ahead: the Fed meeting, the ECB, UK election and news of the ‘significant’ fiscal spending program in New Zealand.

Friday 6th December 2019

All eyes tonight will be on the US non-farm payrolls data. Expectations are mixed, with a weaker ADP employment reading earlier in the week, but a fall in jobless claims overnight. NAB’s Tapas Strickland says a rise in employment could ease pressure on the Fed to cut rates early next year. Phil Dobbie asks whether it could also remove the need for President Trump to rush into reaching a trade deal with China. When and if that will happen continues to play on equity markets, just as the pound continues to be driven by expectations on next week’s UK election result.