NAB Morning Call

Monday 10th February 2025

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Today China’s retaliatory measures against the US take effect and it seems unlikely that the event will pass without comment and threats from the US President. NAB’s Taylor Nugent says Trump might also elaborate on his plans for other regions, such as the EU. Meanwhile jobs numbers from the US on Friday has pushed back expectations around the timing of cuts by the Fed, reinforced by a rise in inflation expectations in the University of Michigan survey on Friday. Aside from tariff news it’s a relatively quiet week, although it’ll be interested to see how Jerome Powell faces two days of questions from parliamentarians this week,

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Friday 31st Janaury 2025

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Last year was a stellar year for growth. Kylie Willment, chief investment officer at Mercer, says they provided a 14 percent return for their superfunds in2024. She highlights a number of opportunities for this year. including growth in private markets. But how will she weather the uncertainty of a Trump administration, where radical trade policies can be implemented quickly? Will Mercer be shying away from investments in areas likely to attract tariffs, like Europe for example? And is AI a technology that will continue to dominate? Do you invest more in it, or diversity away from it? Kylie says we can ‘t expect to see the same level of growth this year, but is she willing to have a stab in the dark and predict the sort of returns we could see?ase note this communication is not a research report and has not been prepared by NAB Research analysts. Read the full disclaimer here.

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Friday 7th February 2025

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Non-farms payrolls data is released later today in the US. NAB’s Taylor Nugent talks through some of this week’s other jobs-related data ahead of this key release. Meanwhile, good and bad news from the UK. The Bank of England cut rates by 25bp.Two members of the board wanted to go further. At the same time the bank cut its growth forecast and expects inflation to rise, extending the journey to their 2 percent target.

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Thursday 6th February 2025

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The US President veered away from talking about trade today and there seems to have been little market response to his thoughts on the Middle East. Instead, the focus is on the Fed and the labour market. The ADP Employment Report showed a surprising rise in new jobs, but it doesn’t follow that it’ll be reflected in non-farm payrolls on Friday. It rarely is. NAB’s Gavin Friend points out that the latest ISM Services index has US growth at a similar rate to Germany. There have been a few Fed speakers out over the last 24 hours, and NAB’s Gavin Friend reflects on their musings, particularly in relation to potential tariffs. The immediate focus now is on the Bank of England, expected to cut rates tonight. Australia’s trade numbers are also out today.

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Wednesday 6th February 2025

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Markets have responded favourably to the news that tariffs have not gone ahead against Mexico and Canada although there is still a chance that there will be measures taken in relation to both countries strong balance of trade. It's likely if that happens that the EU will also be embroiled in that potential trade war. Hence markets have been positive on the latest news but there is still evidently some caution around what happens next. It means there is an unclear path forward for inflation and monetary policy which NAB’s Skye Masters says explains why there has been very little response in bond markets to all the latest tariff news. There’s also a focus now on U.S. jobs with JOLTs showing a sharp fall in job openings,then the ADP numbers out tonight ahead of non-farm payrolls on Friday.

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Tuesday 5th February 2025

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Is Donald Trump’s bark worse than his bite? At the last moment President Trump has stalled tariffs on Mexico for a month to give them time to negotiate a deal. As yet, no similar reprieve for Canada but, as NAB’s Ray Attrill points out, it has moderated the reaction, particularly in equities and FX markets. “Time to reread The Art of the Deal,” says Ray. Does this mean future proclamations are less solid? China, meanwhile, seems more conciliatory in its response, with the Wall Street Journal suggesting they want to return to a deal made in 2020 in which they promised to buy $200billion in US goods. At the time the President called it the “greatest deal ever made”. Will that be enough to pacify him this time?

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Monday 4th February 2025

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Now tariffs are real, well, they will be tomorrow, with 25% imposed by the US on imports from Mexico and Canada, and 10% on those from China, do we need to rethink expectations for global growth, inflation and monetary policy? Phil asks NAB’s Tapas Strickland how the evaluate their monetary policy approach in light of these changes. He also discusses the economic impacts on either side of thew US border.  Tariffs aside, it’s a busy week with Australian retails sales today and USD payrolls on Friday.

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Friday 31st Janaury 2025

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It doesn’t take a genius to work out that the high price of housing is a function of supply and demand. Supply just isn’t keeping up with the growth in the population. But is that the only reason?

Phil presents some alternative theories to Peter Tulip, chief economist at the Centre for Independent Studies. The availability of cheap credit, for example. Or government subsidies like the first-home buyer’s scheme.

Peter argues these have all had little impact on long term prices, and it really does get down to supply and demand. He provides compelling evidence from home and overseas. Why this imbalance? NIMBYism? Perhaps the government's focus should be ondispelling the belief that more people mean worse local services.

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Friday 31st January 2025

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The ECB cut rates as expected but, in line with other central banks lately, prefers not to map out their expectations for further cuts. NAB’s Ken Crompton says the market is fairly certain that more cuts will follow. Meanwhile, NAB has brought forward the timing of the next RBA cut - now expected in February.   Ken explains why the bank has changed its tune. There’s also talk about the response to yesterday’s Fed meeting and tech earnings, why gold is so strong and why the Yen has been the biggest currency mover this morning.

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Thursday 30th January 2025

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What do the Fed, the Riksbank and the Bank of Canada all have in common? Well, they all just made rate policy announcements, but they have all refused to provide forward guidance, or even determine where inflation is heading. JB Were’s Sally Auld says there’s a lot more uncertainty beyond domestic fundamentals, US trade policy being a significant part of that. The Fed, for example, removed the statement from last time about continued disinflationary progress. It’s been a significant session, with the Fed followed by earnings from big tech players, including Microsoft, Meta and Tesla. 

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