NAB Morning Call

Thursday 10th October 2019

There’s a risk on mood in the markets today on hopes that some osrt of interim deal will emerge from the high-level US China trade talks that kick off today. As Phil Dobbie discusses with NAB’s Gavin Friend, that’s despite all the obstacles the US placed in the way in early part of the week. They also discuss a possible path to Brexit – whilst nothing is likely to happen this month, could Boris Johnson find himself with more negotiating power in a month or two? Whilst the FOMC minutes revealed little that was new, Jerome Powell has described the US economy as being in a good place, but expectations are still rising for two further cuts this year. And comment on yesterday’s consumer sentiment numbers for Australia.

Wednesday 9th October 2019

Even though trade talks are still going ahead between the US and China this week, as Phil Dobbie discusses with NAB’s Ray Attrill, what little hope of any sort of outcome seems to be rapidly diminishing. For a start, the US has added 28 more tech companies to list that US suppliers can’t trade with, and it looks like US government retirement funds will be prevented from investing in China. There’s an equally as pessimistic outlook on Brexit, with talks falling apart. As Ray suggests, there’s the danger of a delay followed by a Tory election win, which could secure a no-deal Brexit further down the track. In short, don’t expect the pound to bounce back too much anytime soon.

Tuesday 8th October 2019

President Trump has elevated concerns over Syria announcing he would pull US troops out of the Kurdish regions in the north. As Tapas Strickland discusses with Phil Dobbie, it’s done little to shake markets that are more preoccupied with the outcome of US China trade talks this week. Expectations of a resolution are as low as those over Brexit, where the EU is also planning a response by the weekend. Whilst most markets have been fairly subdued as the waiting game continues, but the one currency showing the most movement is the Aussie dollar. Why is that?

Friday 4th October 2019

In the US the non-manufacturing ISM read came in a lot lower than expected. The result has been a rise in US equities. Phil Dobbie asks NAB’s Ray Attrill whether the weaker data reaffirms that the US will see a cut interest rates this month? Will tonight’s non-farm payrolls be the final piece of evidence that the Fed is looking for? Locally all eyes will be on Australian retail sales, with the question as to whether tax cuts will have boosted spending. And the pound is up a little on Brexit hopes, whilst data from Europe shows the downturn continues unabated.

Thursday 3rd October 2019

It’s a sea of red for global equities and US bond yields today, as markets continue to react to fears of a trade-war induced slowdown, evidenced by the downturn in the US manufacturing ISM discussed yesterday on The Morning Call. NAB’s Gavin Friend tells Phil Dobbie how all eyes will be on the non0manufacturing ISM numbers today, to see if the downturn is spreading into the services sector. Toa dd to the downbeat news, the WTO has ruled that the US can impose tariffs on $7.5b worth of EYU imports in retaliation for state subsidies for Airbus. Could this spark a further escalation of trade uncertainty? And Boris Johnson has presented his Brexit proposal to the EU – will they accept it? The pound is poised to react, one way or the other.

Wednesday 2nd October 2019

The markets have reacted firmly to news from the RBA yesterday. As NAB’s Ray Attrill explains, it’s less to do with the cut, which was expected, but more to do with the aim of reaching full employment. There’s quite a way to go and a question as to whether that can be reached by rate cuts alone. There was a sharp fall in US equities as the manufacturing ISM figures showed a big contraction, reaching the lowest levels since the global financial crisis. Whilst in the UK Prime Minister Boris Johnson readies himself for a speech tomorrow, where he will outline the government’s plans for a Brexit deal. Two plans leaked today have already been blown out the water.

Tuesday 1st October 2019

US equities are on the rise as markets brush off concerns over the lack of progress on US China trade talks. Oil has also retreated from the peaks after the Saudi attacks. Phil Dobbie talks to NAB’s Rodrigo Catril about the swift about turn on the markets, demonstrating how quickly yesterday’s news can be forgotten. Still, data continues to show a global slowdown. They discuss the fall in NZ business conditions and the expectation that the RBA will announce a quarter percent rate cut today.

Monday 30th October 2019

US equities felt the heat on Friday with news that the Trump administration was looking at new ways of limiting investment in China, including delisting Chinese firms listed on US stock indices. Phil Dobbie talks to NAB’s Tapas Strickland about the market reaction and how realistic a possibility this is. They also discuss the latest US and Chinese data, a possible rate cut in the UK and expectations for a rate cut from the RBA on Tuesday.

Friday 27th September 2019

The US dollar index (DXY) reached over 99.3, close to a two-year high. Phil Dobbie asks NAB’s Gavin Friend how, despite the US-China trade dispute and uncertainty from the impeachment proceedings, the dollar keeps rising. It seems it’s another case of the least dirty shirt scenario. Also, does the resignation of Sabine Lautenschlaeger mean for the ECB, what impact will yesterday’s Australian job vacancy numbers have on the RBA’s roadmap and how important are the core PCE numbers for the US today?

Thursday 26th September 2019

The markets reacted positively to indications from President Trump that a trade deal with China could be close. NAB’s Tapas Strickland tells Phil Dobbie that the dollar and equities rose on this news, together with the release of the phone transcript which showed no smoking gun for the impeachment of the US President. Nonetheless, the proceedings are likely to continue and could have repercussions. The pound was the biggest loser, with Boris Johnson addressing a rowdy UK parliament, and reiterating his intention to leave the EU next month. There’s also discussions about escalating trade tensions between the US and the EU, a surprise resignation from the ECB board and the rising expectation of an RBA cut next month.