NAB Morning Call

Friday 21st June 2019

The market continues to respond to the Dovish Fed statement yesterday, with a rally in US equities, falls in Treasury yields and a fall in the US dollar. NAB’s Alex Stanley says the market is now looking to a 50 point cut, whilst closer to home NAB has brought forward the expected date of the next rate cut from the RBA. There were no moves from the Bank of Japan or the Bank of England, but in Japan, at least, the talk is of the need for more stimulus. There’s also been a sharp increase in oil prices, as Iran shoots down a US military drone, with the US President saying ‘Iran made a very big mistake’, later adding that perhaps they didn’t mean to do it, and maybe it was a mistake. The incident doesn’t seem to have had any contagion beyond oil.

Thursday 20th June 2019

The Fed has kept rates on hold but, as NAB’s David de Garis explains, they have kept the door wide open for future rate cuts. Phil Dobbie asks him what the FOMC’s dot points tell us about the path from here. Next to go it’s the Bank of Japan, then the Bank of England. And New Zealand’s GDP growth for Q1 is released this morning too. Philip Lowe might have something interesting to say in a speech he is giving at lunchtime, called “The Labour Market and Spare Capacity”. Will he hint at how that spare capacity will influence the RBA’s rate path for the remainder of the year? Plus, whilst Boris Johnson continues his campaign to Number 10 Downing Street, he seems to be backing away from guarantees of a Brexit by the end of October. Managing expectations?

Wednesday 19th June 2019

There’s been a lot of movement in equities and bonds, with Mario Draghi changing his tune on the state of the European economy and the role of the ECB. Rate cuts look more likely along with other stimulus measures. Phil Dobbie asks NAB’s Gavin Friend how quickly this could happen, and whether it could influence the path being taken by the Fed. They discuss the FOMC meeting which happens just before tomorrow morning’s podcast. The other big news today is the promise of talks between the US and China at the G20 next week. President Trump spoke of an extended meeting, before taking a swipe at Draghi’s stimulus measures lowering the Euro to the detriment of US trade.

Tuesday 18th June 2019

On today’s Morning Call NAB’s Ray Attrill talks to Phil Dobbie about two binary events. One is later this month, when President Xi and President Trump (hopefully) meet at the G20. But Wilbur Ross hasn’t painted an optimistic picture on the outcome in the last 24 hours. The other event is Mario Draghi’s talk at the ECB forum today – what picture will he paint of the European economy and what the he intends to do about it? They also discuss rising tensions over Iran and the latest Empire Manufacturing Index in the US, which recorded its greatest fall ever. Ray suggests its, in part, to do with the timing of the survey, but it still should flag further concern about the state of the US economy.

Monday 17th June 2019

There are rate meetings for the FOMC, Bank of Japan and Bank of England this week, as well as the ECB Forum opening in Portugal tonight. Phil Dobbie talks to NAB’s Rodrigo Catril about rate cuts andinflation expectations. NAB has just revised its forecasts for the RBA. Meanwhile, how much further down can bond yields go? Australia has reached new record lows. Plus, why the Kiwi dollar is struggling and the latest on the Strait of Hormuz.

Friday 14th June 2019

The Aussie dollar was the worst performing of the major currencies overnight, following yesterday’s unemployment numbers. Phil Dobbie asks NAB’s Alex Stanley how much this has heightened the expectations for an RBA rate cut. It’s a similar story in the US, with jobless numbers there failing to meet expectations, adding to indicators that suggest an increasing likelihood of a rate cut. But how soon? Meanwhile, two more attacks on oil tankers in the Strait of Hormuz have pushed oil prices up, with the US this time accusing Iran of the deed.

Thursday 13th June 2019

President Trump has refocused his attention on Europe, threatening sanctions if Germany pushes ahead with the Nord Stream 2 pipeline from Russia. As NAB’s Gavin Friend explains, the news had an immediate impact on the Euro, which had been trading relatively flat. Phil Dobbie asks him why, despite investor expectations the ECB continues to avoid talk of rate cuts. It’s a different story in the US, with the Fed likely to be the next central bank to move, reinforced by slightly weaker CPI figures overnight. They also discuss rate cuts at the RBA, with the banks latest estimate of NAIRU (the unemployment rate at which wage rises kick in) at 4.5%, possibly lower. And a move to block no-deal in the UK parliament was defeated, but don’t assume that means a no-deal Brexit is any more likely. There’s more can kicking to come.

Wednesday 12th June 2019

China is doing what it can to boost infrastructure investment, perhaps fearing the worst outcome from a Trump-Xi meeting at the G20 later this month. It boosted equity markets for a while, but not the whole session. Phil Dobbie talks to NAB’s Rodrigo Catril about the latest on the Chinese economy, the expectations for US CPI tonight, the slide in the Aussie economy, evidenced by yesterday’s NAB Business Survey, and a range of central bank speakers today and tonight. Will Mario Draghi finally admit the European economy isn’t in such great shape?

Tuesday 11th June 2019

There’s a risk on mood in the markets this morning, after Friday’s u-turn by the US President over Mexican tariffs. That’s one Mexican standoff resolved, but Brexit remains, as 10 Tory hopefuls throw their hats in the ring to become next Prime Minister. Sadly, almost all advocate a hard Brexit. In today’s Morning Call podcast Phil Dobbie also talks to NAB’s Ray Attrill about today’s NAB Business Survey – could a soft set of data be the precursor to another rate cut, sooner rather than later? They also look at Friday’s non-farm payrolls – another sign of a weakening US economy?

Friday 7th June 2019

The Euro rose today after the ECB spoke little of new measures to combat the economic downturn. In fact, as NAB’s Gavin Friend explains, they consider the economy to be in good health. Really? Meanwhile, President Trump seems unlikely to back away from imposing tariffs on Mexico next week and has said he will decide on whether to extend the reach of tariffs on Chinese imports after the G20 later this month. Tonight it’s non-farm payrolls in the US - will they mirror the shock fall of the ADP job numbers earlier in the week? Plus, what to expect from home loans data in Australia today.