NAB Morning Call

Friday 28th March 2025

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The US share market fell only slight today after yesterday’s announcement that cars and car parts will have a 25% import tariff imposed on them, irrespective of where they come from. Interestingly, US manufacturers seem to have been hit hardest on the share market. Generally, though, markets took the news in their stride.  There are several Fed speakers talking today. NNAB’s Taylor Nugent says they’ll remain focussed on inflation expectations, but longer-run market measures haven’t followed survey measures higher for now.  UK Gilt yields rose as investors got to grips with yesterday’s budget, and whether the numbers stack up.  Is a tax rise the likely next step? Today the US PCE read for February, Fed’s preferred measure of inflation, along with consumer spending and saving data.

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Thursday 27th March 2025

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Markets are clearly not excited about President Trump’s trade agenda. Equities took a hit in this session on news that an announcement on auto tariffs could happen within hours. There have also been rumours about copper could also be targeted, pushing copper prices to fresh highs. NAB’s Ray Attrill says there’s a shift in sentiment emerging from the Fed, with Austin Goolsbee warning of the danger of consumer inflation expectations being mirrored in bond yields, with the potential for interest rates to rise again.  Locally, Australia’s February CPI print came in just as NAB had predicted, which could pave the way for a cut at the next RBA meeting. Labour market data today will provide more detail on the February print. And the UK economy is slowing more, creating no end of challenges for the Chancellor Rachel Reeve.

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Wednesday 26th March 2025

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US markets lost their mojo a little in this session. NAB’s Gavin friend says this was in part due to a weaker than expected consumer confidence report from the Conference Board. It showed the lowest number for forward expectations in 12 years. The enthusiasm early in the week for more caveats in the April II tariffs diminished somewhat today as president trump indicated that car tariffs would start almost immediately and that his administration was tapping existing laws to impose broader tariffs. There's more enthusiasm in Europe however where Germany's Ifo business expectations rose and there was renewed hope that Ukraine and Russia will agree to a deal to enable merchant shipping in the Black Sea to operate without being shot at. There's also discussion about yesterday's budget, today's CPI numbers and what could be a very tricky day for the UK chancellor.

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Tuesday 25th March 2025

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The US dollar climbed a little today as US equities rallied, led by the Magnificent Seven. It’s like the good old days of American exceptionalism, but will it last or is it a brief stint of buying the dip? That’s a question Phil puts to NAB’s Sally Auld. Some of the ‘hope’ might be driven by confusion over tariffs. At a cabinet meeting today President Trump talked about auto and pharma tariffs being imposed soon, without mentioning the broader tariffs expected on April 2nd. Oil prices pushed higher as he announced tariffs on any country buying oil from Venezuela. Also, why has the Yen fallen so far today?

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Monday 24th March 2025

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The clock is ticking close to April 2nd when the Trump administration unleashes its comprehensive tariff program. As Liberation Day nears, NAB’s Rodrigo Catril wonders whether claims of the end to American exceptionalism were premature, with the US dollar manages to climb a little and equities seeing a few positive sessions. Today’s PMIs will be telling – do European purchasing managers have a more positive outlook than their American counterparts? As expected, Mark Carney announced a Canadian election over the weekend and used his speech to deliver a few harsh words against the US President, also as expected. And UK Gilt yields rose on Friday as rising government debt added to the country’s economic woes.

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Friday 21st March 2025

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APRA plans to phase out bank hybrids (AT1s) by January 2027. So, what exactly are AT1s and why is the regulator so concerned? In short, they are CoCos, contingent convertibles that transfer to equities when a bank capital’s capital falls below a tipping point. But do mum and dad investors understand the complexity of the offering and do the instruments adequately provide for their intended purpose? That’s APRA’s big concern, pointing to the Credit Suisse example where AT1 investors lost a lot of money.

Chris Joye from Coolabah Capital has been critical of the APRA decision. While initially he thought AT1s were too complex an instrument and there was an elegant simplicity in choosing between stocks and bonds, his position has changed. He now worries that some of the mum and dad investors could be driven to even riskier assets.

Chris is not one to hold back his opinions, which you’ll hear this week, but he also does a great job of explaining how this asset class works. Something you won’t be able to buy after next year.

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Friday 21st March 2025

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One of the takeouts from yesterday's FOMC meeting was Jerome Powell's view that the impact of tariffs on inflation is likely to be transitory. NAB’s Rodrigo Catril says markets are still expecting two or more cuts this year as a result. Today he looks at the market reaction to the Fed meeting, what happened at the Bank of England, and why Australian employer numbers yesterday were such a big miss.

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Thursday 20th March 2025

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The Fed kept rates on hold as expected and, unsurprisingly, cut their growth projections, increased inflation and increased the unemployment forecast  for this year.  But the dot plot has changed very little.  NAB’s Gavin Friend joins Phil to dissect the Fed’s statement and Jerome Powell’s press conference that followed. It’s clear that the FOMC is in a wait-and-see mode in light of Trump’s policies and the next meeting will be the one to watch for. The forecasts also suggest that they see the inflationary impacts of tariffs to be transitory - something that was reinforced during the press conference. The Bank of Japan also sat on their hands, citing trade policy concerns. Next, it’s the Bank of England’s turn to do nothing. With no press conference or forecasts it’s up to you whether you stay up late for it. Before any of those, Australia’s employment data is out today, with NAB expecting a slight fall in the unemployment rate.

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Wednesday 19th March 2025

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There was more market uncertainty today driven largely by geopolitics. Trump and Putin have reached an outline agreement for a 30day ceasefire, but it really hasn’t moved markets. There was more of a concern over the end to the Israel-Hamas ceasefire. Oil is higher and gold has reached new highs again today. Phil talks to NAB’s Skye’s Masters above moves overnight, including the shift in share purchases from the USA to Europe. And Canada’s CPI rises again - a cause for concern for the Bank of Canada and one that could be echoed around the world?

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Tuesday 18th March 2025

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Equities had a good session overnight on both sides of the Atlantic, perhaps because there wasn’t much in the way of bad news. The headline number of US retails sales was weaker than anticipated, but NAB’s Taylor Nugent says it wasn’t bad when you looked a little deeper. The Empire Sate Manufacturing index showed a big dip but is also considerably volatile. Markets weren’t too excited by the press conference in China where authorities announced their special initiatives to boost domestic consumption, but it continues to be a cautious approach, although it might have helped the Aussie dollar a little, which rose more than other major currencies. The news to look out for today relates to Ukraine – Trump and Putin are talking, will they reach a ceasefire deal that Ukraine will agree to? 

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