NAB Morning Call

Wednesday 25th September 2019

Nancy Pelosi has announced impeachment proceedings against the US President, over allegations he pressured the Ukranian President to interfere with the 2020 elections. As NAB’s Rodrigo Catril explains, the news has hit equities, bond yields and oil prices hard. Equities had already been impacted by President Trump’s UN speech, where he hit out at China (and many other places) and technology firms. In the UK parliament is set to resume after the Supreme Court ruled that Boris Johnson did illegally prorogue parliament, a finding which has helped the pound gain some strength. At home, Philip Lowe didn’t exactly spell out a rate cut at the next RBA meeting, but many have interpreted it that way, and the RBNZ is unlikely to make a move today.

Tuesday 24th September 2019

RBA Governor Philip Lowe is talking in Armidale later today. NAB’s Tapas Strickland tells Phil Dobbie that he could use the opportunity to signal that another rate cut from the central bank is imminent. They also discuss the performance of the NZ dollar which has had a turbulent couple of weeks. Meanwhile, further evidence of the US EU divide, with Markit PMIs showing strength in US manufacturing, whilst in Germany the fall has been worse than anticipated. Mario Draghi is looking for answers, whilst Michel Barnier is having difficulty seeing how a Brexit deal can be reached. For now, the pound hasn’t taken that news as badly as it might.

Monday 23rd September 2019

Hopes of a quick resolution to the US China trade dispute seem as unlikely as ever, with President Trump dismissing the idea of a partial deal and China cancelling a trade delegation to meet US farmers. Phil Dobbie talks to NAB’s Rodrigo Catril about the risk-off market reaction, with equities falling, bond yields rising and safe-haven currencies on the rise. They also discuss attitudes to the European economy and whether Brexit optimism was over-egged last week. Plus, the news that NAB now predicts two rate cuts from the RBA this year on the back of poor employment data last week.

Friday 20th September 2019

There’s a rising expectation that the RBA will cut interest rates at their next meeting, following disappointing employment numbers yesterday. Phil Dobbie asks NAB’s Alex Stanley why the numbers were so concerning. There’s also discussion on central bank decisions in Japan, Switzerland and the UK, the latest OECD forecast downgrades and the Fed’s third day of liquidity injections into the US money markets. Why is this happening and is it a cause for concern?

Thursday 19th September 2019

It didn’t take long for the US President to attack the Federal Reserve as it cut rates but didn’t give a clear indication of further cuts or promise the return of QE. Phil Dobbie talks to NAB’s David de Garis about the Fed’s reasoning, the market reaction and the influence of a second liquidity shortfall in the overnight money markets. They also look at the Saudi oil situation, with prices falling, perhaps because a military response against Iran looks unlikely. Plus, what could a Supreme Court decision mean for Boris Johnson’s Brexit plans, a weaker UK CPI, and a look ahead to Australia’s employment numbers today.

Wednesday 18th September 2019

Oil prices fell sharply today on the news that Saudi oil production will be back in full by the end of the month. Phil Dobbie asks NAB’s Gavin Friend whether we’ll see oil return to previous highs or has the incident created a risk premium. They also discuss US industrial production numbers and the German ZEW survey, as well as the NY Fed’s first overnight repo agreement for 10 years, as funding rates rose as high as 10%. Plus, a preview of tomorrow’s Fed policy decision and the minutes from the RBA yesterday, a little more dovish than expected.

Tuesday 17th September 2019

Brent Crude rose 20 percent at the market open on Monday morning, the biggest single move since the invasion of Kuwait in 1990. Phil Dobbie talks to NAB’s Rodrigo Catril about the lasting impact of the strike, which could see oil prices higher for months to come. The issue goes beyond supply to questions of ongoing political repercussions. They also discuss who will be the winners and losers and the effect on that other area of uncertainty, the US China trade war. The hurt to be felt by China will compound the downturn shown in retail sales and industrial production. Meanwhile the pound lost most of Friday’s gains as Boris Johnson turned up for lunch with no concrete plans for a Brexit deal. Plus, what can we expect from the RBA minutes released today?

Monday 16th September 2019

Attacks on the world’s largest oil refinery has hit global supplies hard. Phil Dobbie talks to NAB’s Ray Attrill about the impact on oil prices and how the accompanying political repercussions could hit other asset classes. On the positive side, US retails sales data and consumer sentiment surprised on the upside at the end of last week and there’s hope of an interim US China trade deal which could lead to a lifting of tariffs on China’s imports of US agricultural products. There’s also discussion on the rising yields on global bonds ahead of the FOMC meeting this week, and what Brexit will bring this week, apart from more uncertainty.

Friday 13th September 2019

The ECB is to reintroduce quantitative easing, along with a small cut in rates and more TLTROs. NAB’s Gavin Friend explains the measures they are taking and the market reaction. There’s been a strong reaction on President Trump’s twitter stream, with the measures being used as another opportunity for Fed-bashing. Meanwhile, there’s been a small olive branch offered to China, with a two-week delay in the raising of tariffs next month, adding small hope to a trade resolution. And oil declined today, as an IEA report highlighted the problems of controlling production outside OPEC+. Plus CPI slowing in the US and what to expect from US retail sales later on.

Thursday 12th September 2019

Mario Draghi is easing his way out of the ECB tonight (Australian time), literally. After this, he has one more meeting before Christine Lagarde takes over, but a stimulus boost today is widely anticipated. Phil Dobbie asks NAB’s David de Garis what we can expect beyond a simple rate cut. There’s also word on NAB’s revised expectations for cuts from the RBA, with one expected later this year and one early in 2020. And with producer prices rising is a cut from the Fed still expected next week? Also, today. How oil prices have taken a hit as a more conciliatory White House seems ready to talk to Iran, and an olive branch from China, but is it enough to postpone the forthcoming increase in tariffs imposed by the US? Plus, a bridge too far for Boris Johnson?