NAB Morning Call

Thursday 16th January 2025

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The biggest news this morning, the ceasefire in the Middle East, has had virtually no market response. Instead, bonds and equities have rallied on the positive CPI news from the US overnight. NAB’s Ken Crompton says the softer number has increased the prospect of more than one cut from the Fed this year. Bond yields have fallen markedly on both sides of the Atlantic. Today Australian’s employment data will be the key area of focus, particularly after the surprise fall in the unemployment rate last time. Will today’s data lead the RBA to conclude the labour market is too tight, or will they adjust their view of where the non-inflationary rate is?

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Wednesday 15th January 2025

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Markets are holding out for today’s US CPI print, but JBWere’s Sally Auld says its unlikely to move the dial much on the timing of Fed rate moves. The US dollar is weaker, for once, perhaps because of reports that Donald Trump will drip-feed tariff increases to help contain inflationary impacts. He is, meanwhile, talking up his policy on energy dominance from day one. There’s also discussion on Australian consumer confidence, Chinas credit data, US and NZ business confidence – they couldn’t be further apart – and the plethora of Fed speakers getting their oar in today.

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Tuesday 14th January 2025

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The US dollar continues to rise. Bond yields are also pushing higher. How long can this continue for? How much is because of rising concerns about persistent inflation, and how much is priced in for Trump uncertainty? If it’s the latter, could some of these moves quickly unwind, particularly if the new president’s bark is worse than his bite? All questions Phil puts to NAB’s Rodrigo Catril on today’s podcast, plus the rising price of oil, trade data from China and the latest take-outs from speakers from the ECB, BoJ and the Fed.

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Monday 13th January 2025

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NAB’s Ray Attrill joins Phil on the podcast this morning, where the inflation outlook is very different to where we were before Christmas. Ray says Fed-speak last week was already pushing back expectations for a rate cut in the US, then a much stronger than anticipated payrolls number of Friday reaffirmed those concerns. That’s pushed yields higher and weekend equities, whilst the US dollar continues to rise, at the expense of all other major currencies. With US inflation data this week, prepare for a choppy one.

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Friday 20th December 2024

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It’s been a year of surprises. US exceptionalism has long been talked about, but this year it particularly exceptional, particularly in relation to the rest of the world. Growth has picked up, the dollar has strengthened, and the share market has repeatedly hit new highs, driven by Trump, tech and the AI revolution. So, what does 2025 have in store?

The entire NAB Morning Call team - Sally, Skye, Ray, Rodrigo, Gavin, Tapas, Taylor and Ken - join Phil to crystal ball gaze on 2025. Will Trump push ahead with his tariff threat? What will that mean for international trade? Will China manage to find the ways and means to stimulate its domestic economy and, it not, what’s the impact on the CNY and the Aussie dollar? Could the Aussie fall below 60 US cents next year?

They also discuss the path of central banks next year. Speculation has been rife this year about who will cut when and by how far. There’s no clear agreement on the neutral rate that each bank is striving for. Does that mean we’ll see smaller movement in bond market.

A myriad of questions tackled in this special 40-minute episode, the final Morning Call of 2024. We’re back on January 13th, by the way. Usual time.

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Friday 20th December 2024

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As we recovered in the later editions of the Morning Call yesterday there was a strong market response to the Fed yesterday -from the statement and the press conference. As NAB’s Taylor Nugent explains, there’s been a slight reversal in equity markets today, but nothing significant, and the US dollar continues to push higher. Since then, the Bank of Japan has done as expected, but still managed to weaken the Yen, perhaps because some are now wondering whether a rate rise won’t happen until March. The Bank of England kept on hold, but with a divided board. The Norges Bank and Riksbank did as expected. Meanwhile a s surprise in yesterday’s New Zealand GDP. Good news or bad? 

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Thursday 19th December 2024

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The Fed has cut interest rates as expected, and they have halved the number of cuts they expect next year. As NAB’s Gavin Friend points out, there was only one dissenter, wanting to keep rates on hold. That seems highly likely next time, as the Fed dot plot sees just two cuts next year, eventually aiming for an expected neutral rate close to 3 percent.

Also, UK CPI didn’t surprise, and the Bank of England isn’t expected to either, keeping rates on hold, as inflationary pressures, though falling, remain high. The Bank of Japan also meets today. Another case of hold, but an expectation of a small rise early next year. And New Zealand’s economy is expected to show a second quarterly decline this morning.  

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Wednesday 17th December 2024

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Markets were surprised overnight by the increased in UK wages. Alongside the weakness in European data lately, the yield spread between the UK and Germany is now at its highest level since the reunification of Germany in 1990. Other data was less surprising. US retail sales rose, but as much as many had anticipated. Canada’s inflation fell. Aussie consumer confidence was down a little, but not by much and after two months of solid growth. NAB’s Skye Masters talks through the day’s news and looks ahead to the Fed meeting. What could surprise the markets this time tomorrow?

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Monday 16th December 2024

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US growth continues to lead the way. The latest PMIs showed services growth for Europe and the UK, but not as much as the US. In all cases, though, there’s a fall in the manufacturing PMI. The US strength helped push equities higher - with new highs for the NASDAQ and S&P - and strengthened the US dollar and pushed Treasury yields higher. The data doesn’t stop flowing, even though it’s only a week till Christmas. UK employment data today might do little to influence the Bank of England this week, but if wages growth remains high it’ll support their reticence to cut too quickly. Australian consumer confidence is out today as well. NAB’s Taylor Nugent talks through the numbers.

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Monday 16th December 2024

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The Fed and four other central banks meet this week. NAB’s Ray Attrill says the Fed and the Riksbank will cut rates, whilst the Bank of England, the Bank of Japan and the Norges Bank will all keep rates on hold. Today PMIs are released, which are likely to show a widening gap between US exceptionalism and European gloom. France has a new Prime Minister and Moody’s joining the agencies downgrading their credit rating, assuming the government will be able to do very little to reduce debt in the short term.

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