NAB Morning Call

Friday 8th November 2024

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Australia faces a rising tide of homelessness as rents push higher, out of the reach of many lower income earners. According to Rebecca Pinkstone, chief executive of Homes NSW, in her state alone there are 57,000 people on the register, looking for a home. Rents in Sydney and surrounds are often considerably more than a state pension. Supply is a big part of the problem, with developers reluctant to commit to the growth required because they face rising material costs and skills shortages. Subsidising existing rental simply maintains the elevated prices for properties. And, as Phil points out, it’s not just low income earners hit by the housing crisis. Household sizes in Australia are well above those of comparable economies, as children wait longer to move out. Phil asks, is it just about supply? Or is it time to address the government policies that have elevated prices for decades?

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Friday 8th November 2024

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The Fed cut rates as expected today by 25bp, after the big 50bp cut last time. But there’s one more meeting scheduled before Christmas and JBWere’s Sally Auld says markets are evenly split as to whether that’ll mean another cut this year. The message from the Fed today was that the risks are balanced when it comes to achieving their employment and inflation goals, but what about the elephant in the room? Will Trump’s agenda drive inflation higher and delay the speed of cuts. That seems to be happening in the UK, where the Bank of England cut rates as expected, but the impact of the budget could delay further cuts. One more this year seems unlikely. Today’s big news is likely to be the announcement on fiscal stimulus from China’s National People‘s Congress, most likely before the Sydney close says Sally.

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Thursday 7th November 2024

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There is a Trump trade after all, and we just saw it. The US dollar rising, bond yields in the US pushing higher, US equities higher at the expense of equity markets elsewhere. NAB’s Gavin Friend joins Phil to talk through the market response to the US Presidential election news. They discuss how it’s hit Europe and how it could prompt a domestic focus on China’s stimulus, which is expected to be announced on Friday. Meanwhile, will the news have any impact on the Fed and Bank of England, both meeting in the next 24 hours. Not this time round says Gavin, but there’s no doubt Trump’s promise of further tax cuts could have an impact on the terminal rate in the US.  

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Wednesday 6th November 2024

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Polls start closing in the next few hours. NAB’s Taylor Nugent says Virginia, which closes late morning Australia time, was called by Associated Press within 36 minutes last time. So, we could start to get a picture of how each candidate is faring by lunchtime today, even if the final outcome could take time – possibly weeks. Something else that could take longer than originally envisaged, a cut by the RBA.  Australia’s approach with shallower hikes means there’s less rush to cut rates and February is looking a little less likely. Taylor talks through the points from yesterday’s RBA meeting. Plus, why today is an important one for New Zealand.

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Tuesday 5th November 2024

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Markets have responded to a poll over the weekend which showed a swing in favour of Kamala Harris in Iowa. It was driven, apparently, by more older women expressing a preference. NAB’s Tapas Strickland says Iowa isn’t normally considered a swing state, so there is the question about whether this could be replicated across the country. But we haven’t seen a massive unwinding of positions that you might associate with the Trump trade.

The RBA meets today and there will be a lot of focus on what’s in and out of the statement, and whether there’s a more concerted effort to drive market expectations further back into mid-2025.

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Monday 4th November 2024

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Mid-morning Wednesday Australia time the polls close in the US and soon after, hopefully, the world will know the choice made from two very different political and economic agendas. NAB’s Ray Attrill says this uncertainty is showing through in the data. It’s been blamed for the fall in the US manufacturing index on Friday, for example. It perhaps also explains why there was a limited response to Friday’s non-farm payrolls data, which showed an unexpected contraction in employment growth. Also today, is NVIDIA about to overtake Apple as the highest valued company on the planet?

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Friday 1st November 2024

Please note this communication is not a research report and has not been prepared by NAB Research analysts. Read the full disclaimer here.

Australian house prices have defied logic. Core Logic’s Eliza Owen says when interest rates rise you should see asset prices come down. In theory. Yet the last rate rise, in November last year, coincided with a fresh record high in home values. Now homes in NSW have increased in value for 20 consecutive months. Until now. Today’s data, for October, shows the growth streak in Sydney has been broken. Eliza joins Phil to break down the detail on trends in home prices across the country.

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Friday 1st November 2024

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Some big market moves overnight, with sharp falls in US equities.  Markets are clearly not impressed with the forecasts that came with the strong earnings results this week. In the UK bond yields are markedly higher, particularly at the front end. NAB’s Skye Masters says there are concerns that the extra spending could boost inflation.  The focus now is on tonight’s US jobs data, before a week that includes THAT election.

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Thursday 31st October 2024

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There were a few reasons for central banks to be cautious about the speed of the cuts to interest rates. Europe is growing a little faster than expected, whilst German inflation kicked back up a little. Whilst US GDP is weaker it is being held up by strong levels of consumption. Australia’s CPI didn’t surprise, so there’s no reason for the FRBA to change the expected path of rate cuts. And the UK Chancellor announced a budget high on tax hikes, but also higher on borrowing. What impact will that have on the Bank of England? NAB’s Gavin Friend interprets a day rich on data - not forgetting the latest tech earnings - which much more to come.

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Wednesday 30th October 2024

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Something for everyone today. On the jobs front US openings are down, whilst unemployment in Japan fell. On growth we have the US GDP number today, after the Atlanta Fed’s GDP Now forecast for Q3 was revised down.  Europe’s GDP numbers are released today along with CPI for various European countries, and for the Eurozone as a whole, today and tomorrow. More significantly, Australia’s quarterly CPI read is released this morning. Phil asks NAB’s Taylor Nugent whether it’ll have much impact on the timing of cuts from the RBA. Then there’s the tech earnings - Alphabet today, Meta and Microsoft tomorrow, Apple the day after. 

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