NAB Morning Call

Friday18th October 2024

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The ECB has cut rates with Christine Lagarde saying the disinflationary process is on track. NAB’s Gavin Friend says since the last meeting inflation has come down, and lower growth will be giving the bank confidence that it will continue in that direction. Nonetheless, base effects might see a temporary rise in core and headline rates that make it difficult to signal back-to-back cuts, even though the weakness in the economy could well demand it. Meanwhile strong jobs data In Australia should be the final nail for those looking for another RBA cut this year. Similarly, strong retail sales growth in the USA demonstrates a resilient economy that can survive without rapid rate cuts. On that basis could we see the Fed move just once before Christmas?

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Thursday 17th October 2024

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Inflation is slowing faster than expected in the UK. Phil asks NAB’s Ken Crompton whether this means the Bank of England could cut twice before Christmas? Markets have fully priced a cut from the ECB later today, the question is, what next and when? Australian employment numbers and US retail sales are out today, along with a further announcement on housing and debt from the China. Ken says it’s another “drip feed in the ocean of fiscal stimulus” – are markets prepared to be disappointed this time?

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Wednesday 16th October 2024

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There were sizeable moves in various asset classes over the last 24 hours, and that was before a revealing Trump interview with Bloomberg’s Editor in Chief. Phil talks to NAB’s Rodrigo Catril about a day that has seen oil lower on expectations that Israel won’t strike Iranian oil installations, shares fall as a report suggests they are overweight and concerns about AI chip demand and possible restrictions on exports from the US. Plus, another shift in sentiment around China’s support plans. NZ and UK CPI are out today. In New Zealand it is expected to support the case for faster cuts, whereas the UK number is likely to give the Bank of England a bit more time to move.

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Tuesday 15th October 2024

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New Zealand’s Performance of Services Index stuck yesterday at 45.7 for September, marking the seventh month in contraction. NAB’s Rodrigo Catril says the only good news you can take for that is that it the downturn isn’t speeding up. In China the latest trade numbers were also a disappointment, highlighting the need for a stimulus from the government. In the US equities pushed higher. Phil asks, it can’t all be earnings season, can it? The question is, are some shares buoyed by the return of the Trump Trade, as the former President is experiencing a resurgence with the bookies. Today bank lending for Europe and employment and wages for the UK are the two key bits of data, along with Canadian inflation.

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Monday 14th October 2024

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As predicted by Tapas on The Morning Call last week there was no definitive plan fiscal plan presented by China’s Ministry of Finance on Saturday. As suggested, it will need to be ratified by the standing committee of the National People’s Congress, which is likely to happen before the end of the month. But NAB’s Ray Attrill explains some of the plans that were outlined, including giving local authorities access to earmarked cash that could help stimulate the economy almost immediately. There’s also a look at last week’s US PPI number and what that, in conjunction with the hotter than anticipated CPI number, could mean for the path of rate cuts by the Fed before Christmas. Might there just be one cut to come? 

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Friday 11th October 2024

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

Phil Suttle is an economist who has worked at JP Morgan, the Bank of England, the Fed, the World Bank, the IIF, Barclays Capital and Tudor Investments. These days he provides his own observations and analysis to paying subscribers, saying he enjoys the independence that provides. He really can say what he thinks. So, what does he think about the world right now? With the US less than a month away from a Presidential election, how will the US economy respond to the two distinctive approaches of Donald Trump and Kamala Harris?

He also talks to Phil about the differences in approaches that have been taken by central banks, including the RBNZ and RBA, the chance of a China recovery and what that means for the west, and the dire state of the German economy.

It’s a whirl wind tour with Phil (and Phil), with so much more to see that we’ll have to do it again sometime soon.

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Friday 11th October 2024

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After stronger than expected jobs numbers last week, the CPI data overnight shows inflation isn’t coming down quite as quickly as expected. The combination might suggest there’s less of a rush for the Fed to cut rates but NAB’s Tapas Strickland says there hasn’t been significant moves on the pricing of Fed cuts since the inflation numbers. It will make the words from the upcoming “bevvy” of Fed speakers perhaps more interesting than usual. The other significant event to look out for is the announcement from China’s Finance Minister at the weekend. Tapas believes there’s reason to suggest it will be another disappointment. And with the Israeli security cabinet meeting just as we record today’s episode, could they be ready to retaliate? No doubt part fo the reason for the rise in oil and gold prices this morning.

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Thursday 10th October 2024

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Storm Milton hit the Florida coast at 1am ET. Despite that, and the continued risk of an Israeli attack on Iranian oil facilities, oil prices fell overnight. Obviously China demand is part of the picture here, but another ‘announcement’ is expected from Beijing this weekend. In the latest FOMC minutes it is clear there was agreement that the risk of inflation had diminished, whilst the downside risk to employment had increased. The latest payrolls data suggest that downside risk is less clear and JBWere’s Sally Auld wonders whether all those voting for a large cut were entirely convinced of it. Maybe some were cajoled by Jerome Powell. It was a clearer picture for the RBNZ yesterday and Sally wonders whether the next cut will be even bigger. 

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Wednesday 9th October 2024

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Markets with any China connection have responded negatively to news from the National Development Reform Commission. An announcement was expected, and most will have assumed it would include a large swag of spending from the three trillion Yuan that was believed to have been earmarked for fiscal stimulus. But, as NAB’s Ken Crompton discusses with Phil, all they did was brought forward 200 billion Yuan from next year’s budget. They also discuss yesterday’s NAB business survey and look ahead to the RBNZ today. A big cut is expected, but will there be another one next time round?

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Tuesday 8th October 2024

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Today markets are responding to a mix of adjustments to expectations for Fred rate cuts, alongside continued uncertainty about developments in the Middle East. Late in the day in the US a judge has added to downward moves in equities by ruling that Alphabet cannot block other marketplace providers from competing with the Play Store. NAB’s Rodrigo Catril takes Phil through the moves overnight and looks ahead to a Quadrifactor (yes that’s right) of local news. Plus, possibly news of government support from China today.

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