NAB Morning Call

Thursday 24th October 2019

Mario Draghi is preparing to chair his last ECB meeting, with no expectation he will move rates. In fact, he leaves a board divided on what to do next, a problem that Christine Lagarde faces when she takes over next week. Phil Dobbie talks to NAB’s David de Garis about whether central bankers are increasingly questioning whether monetary policy has gone as far as it can go and what that means for future rate cuts, including the RBA. Also, Brexit. The pound is moving little, but Boris Johnson seems intent on manoeuvring towards a UK election.

Wednesday 23rd October 2019

There have been two big votes in the UK this morning. In the first, MPs voted for the Brexit Withdrawal Bill to proceed. But the second vote rejected the timetable that would see the bill finalised by the end of the week. Phil Dobbie talks to NAB’s Gavin Friend about why the market reaction has not been favourable and what could happen next. For a start, the UK PM has halted progress of the bill he fought so hard to win! They also discuss the Canadian election and today’s NZ trade figures.

Tuesday 22nd October 2019

As Phil Dobbie discusses with NAB’s Ray Attrill, two familiar stories dominated the markets overnight – Brexit and the US China trade talks. The UK government failed to have another vote on their Brexit plans, instead tabling the detailed agreement which will have to pass through both houses, with amendments. That’s a tight timetable to meet Boris Johnson’s Halloween deadline and there’s no guarantee what shape it’ll be by the end of it. There’s optimism on the US China trade talks, however, with the possibility that the December tariff hikes might be taken off the table. We’ve already seen some risk-on sentiment today, but either of those two stories could go pear shaped, of course.

Monday 21st October 2019

After the vote on Boris Johnson’s Brexit deal was postponed on Saturday it looks like he’ll be trying to get parliament to vote on it today or tomorrow, and there’s a strong chance he’ll get the numbers. But, as Phil Dobbie discusses with Rodrigo Catril, the pound has already weakened on the latest delay. Meanwhile, President Trump says he expects a deal to be done with China by the middle of next month, as markets respond fleetingly to China’s weaker than expected GDP numbers on Friday. And this week it’s Mario Draghi’s last ECB meeting, and there’s a bunch of Japanese trade numbers out today.

Friday 18th October 2019

A beaming, if somewhat weary, Boris Johnson announced a brand-new deal on Brexit, agreed by the EU. Phil Dobbier talks to Alex Stanley about the early market response, which was somewhat weakened by the realisation that a lot of opposition remains in Westminster. The Aussie dollar is up on the back of strong employment numbers yesterday – the ramifications are discussed in today’s podcast, plus a swathe of Chinese data out today.

Thursday 17th October 2019

The pound has risen again as negotiations continue into the night (again) over a Brexit deal. VAT is the latest sticking point in the detailed discussions. NAB’s Gavin Friend says there are too many people wanting a deal for it to fall by the wayside. If it’s not now, it’ll be soon. But it still has to get through the UK parliament. Meanwhile US retail sales underperformed, and should the RBNZ rethink their approach on the back of the latest NZ CPI numbers? Plus, a look ahead to today’s Australian employment numbers.

Wednesday 16th October 2019

Boris Johnson has till midnight tonight (UK time) to deliver the legal text for a Brexit deal for discussion at the EU summit this week. Phil Dobie asks Ray Attrill – haven’t we been here before? Yet the pound is riding high(er) on the back of optimism. Meanwhile, no progress on US China trade, but equities have been rising on strong Q3 earnings results in the US. The RBA minutes were dovish, as expected, and NZ CPI numbers today could help reinforce the direction for the RBNZ.

Tuesday 15th October 2019

There’s a little apprehension in the markets this morning because the US China trade deal might not be a done deal. As NAB’s Rodrigo Catril explains on today’s Morning Call, China is looking for a written undertaking that the US won’t raise tariffs in December, as scheduled. Brexit is also looking like less of a done deal. In short, Boris Johnson is running out of time, but wasn’t that always part of the plan? There’s also discussion on the latest Chinese trade figures, with a big fall in imports and the latest RBA minutes out today.

Monday 14th October 2019

The markets finished last week on a high, with a phase 1 deal sorted between the US and China, and hope that a solution might have been found for Brexit. Phil Dobbie asks NAB’s Tapas Strickland whether there was a little too much optimism at the end of the week, given both deals could easily go no further. They also look at US consumer confidence and Canadian employment, both surprisingly high, and NZ manufacturing, unsurprisingly subdued. They look ahead to the release of today’s NZ performance services index and Eurozone industrial production numbers for August.

Friday 11th October 2019

Today could have been so different. Early in the week the expectation was that US-China trade talks and Brexit negotiations would go nowhere. Now, both look like some sort of deal could be reached. Phil Dobbie talks to NAB’s Rodrigo Catril about the change in direction, that could see a currency pact delaying next week’s scheduled tariff increases in the US, whilst the UK and Irish Prime Ministers came out of a three hour meeting talking of a way forward that could see a deal before the end of the month. Perhaps continued poor data is helping to concentrate the minds of politicians, with UK industrial production down, US inflation lower and German exports falling markedly. And this morning’s PMI for New Zealand will show this part of the world is not exempt from the downturn.