Monday 31st July 2023

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Bonds markets led moves in currency markets on Thursday on news of changes to Japan’s yield curve control. A lot of those changes were retraced on Friday, o the back of softer inflation numbers for Europe and the US. So, what exactly happened? NAB’s Ray Attrill talks through how a decision over Japanese bond yields impacted yields on bonds in many other markets, including Australia. And , even though moves were retraced somewhat on Friday on inflation data, will there be a longer lasting impact on bond yields elsewhere as a result of the BoJ policy decision? Listen in for a crash course on yield curve controls.

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Friday 28th July 2023

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Currency markets were particularly choppy overnight. NAB’s David de Garis says the moves were driven by the stronger than expected GDP read from the USD, which saw the US dollar much higher, pushing other major currencies – except the Yen – much lower. There was less of a response to the ECB, because there were no surprises. Rates were lifted by 25 basis points and Christine Lagarde spoke again about data dependency. Hard to get excited about that. But equities have taken a solid hit in the US. We can expect more volatility as inflation and GDP data is released for Europe today and early next week, plus rebalancing for the end of Q2. As Dave puts it on today’s podcast, expect things to be whippy!

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Thursday 27th July 2023

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The FOMC lifted interest rates by 25bp as expected, and the ECB is expected to do the same tonight. But in each case, it’s unclear where the central banks go next. But NAB’s Ken Crompton says the RBA is unlikely to lift rates next week, given the softer than expected Australian CPI print yesterday. But again, it’s unclear where they go from there. There were no strong market moves during or after Jerome Powell’s Fed press conference this morning. He clearly didn’t want to appear too dovish or too hawkish, just data dependent. He did reiterate his personal belief that the US will navigate a soft landing. Listen in for more on what was said.

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Wednesday 26th July 2023

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There was a more substantial build in the Aussie rally yesterday, says NAB’s Ray Attrill which built further overnight. The reason, China, with the Politburo making announcements that suggest they are serious about stepping up macro policy support after the weak Q2 GDP numbers. That’s helped the Aussie and commodities. Meanwhile, the US is languishing in more evidence of a soft-landing, whilst Germany and most of Europe face a tough future. WE don’t have to wait long to see just how that will be reflected in central bank policies, starting with the FOMC first thing tomorrow. Strong earnings results for Alphabet and Microsoft too.

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Tuesday 25th July 2023

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Markets are still expecting that the Fed is near the end of its tightening cycle, with equity markets continuing to push higher today. But what if the Fed sounds particularly hawkish this week? And what if the plethora of big tech earnings results come in much weaker than expected? It could be a choppy second half to the week. PMIs for Europe came in weaker than expected, and NAB’s Skye Masters says that opens up the question about what the ECB does after this week’s meeting.

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Monday 24th July 2024

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The FOMC, the ECB and Bank of Japan all meet this week. No change of direction is expected from the Bank of Japan despite their sticky core CPI number last week. The FOMC and ECB are both expected to lift rates, but does it end there? That’s a question put to NAB’s Rodrigo Catril, on a day when we will be festooned with data – the flash PMIs are out for the US, Japan, UK, Euro area, France and Japan. Will they factor into central bank decision making?

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Friday 21st July 2023

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Markets are back to worrying about jobs data, it seems. Aussie yields rose after yesterday’s much stronger than expected employment numbers. The Aussie dollar is higher, even against a rising US dollar, which is also in part down to job concerns after a fall in unemployment claims last week. NAB’s David de Garis says we shouldn’t get too carried away by one week’s report on jobless claims, which are known for their volatility. UK retail numbers are expected to fall again today, but it’s an economy that keeps surprising us. And Japan’s CPI are out, but are unlikely to change the direction of the BoJ anytime soon.

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Thursday 20th July 2023

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Markets were buoyed a little further on the back of UK CPI numbers. Seemingly, if the UK can see core inflation fall a little further than expected then there’s hope for everyone. NAB’s Tapas Strickland says, although the fall wasn’t dramatic, it adds to the global view that inflation has peaked and it could fall rapidly from here. New Zealand’s CPI also fell, but Europe’s final CPI read was revised up a little. The RBA will be watching Australia’s employment numbers today, but Tapas warns that the numbers have been subject to some volatility lately so it should be treated with caution.

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Wednesday 19th July 2023

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Markets are still excited about the prospect of inflation cooling, with equities pushing higher in the US. JBWere’s Sally Auld says the fall in the headline inflation rate in Canada was also encouraging, but there was a marginal move down in core inflation. There are more inflation numbers today, with CPI for New Zealand and the UK. The UK will be a focus, with its core rate expected to remain stubbornly high. If it does come in lower than expected that will only fuel hopes that we are fighting the final battles for inflation. But a higher reader could see the BoE pull a 50bp hike out of their hat.

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Tuesday 18th July 2023

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There was further evidence of a slowdown in the Chinese economy in yesterday’s GDP print. NAB’s Rodrigo Catril says it reinforces the need for targeted fiscal measures to keep the economy on track for the target 5% annual growth. The Aussie moved down lower on the news and could take a further hit if the RBA minutes suggest a delay before they hike again. There was a sprinkling of US data that reinforced the soft-landing scenario, supported by words from Janet Yellen suggesting a recession won’t happen given the strong labour market, with more people returning to work.

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