NAB Morning Call

Tuesday 19th March 2024

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Two central banks meet today, but the outcomes seem predictable. The end of negative rates by the Bank of Japan seems to have been well signalled, and the RBA continues its restrictive policy settings. NAB’s Skye Masters says we continue to look to November as the first possible rate cut in Australia. Meanwhile bond yields in the UW continue to push higher, ahead of the FOMC meeting later in the week. Phil asks if 2-year yields could push as high as 5%. Elsewhere, positive data from China yesterday, the ZEW survey for Europe today and Canada’s inflation print. 

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Monday 18th March 2024

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This week we hear the interest rate decisions from the RBA, the Fed, the BOE, the Bank of Japan, Norge’s Bank and the Swiss National Bank. Will any of them move rates? NAB’s Rodrigo Catril looks at what to expect and when, including the growing possibility that we’ll see a lift in rates and an end to yield curve control by the BoJ. Generally, though, the tone seems to be higher for longer as many indicators are showing inflation is taking a while to get under control.

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Friday 18th March 2024

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A pandemic, water shortages, labour supply issues, the cost of finance, China’s slow recovery, climate change. It seems like the agricultural sector faces massive headwinds, but NAB’s Lea Jurkovic says there’s still an immense amount of optimism within the sector, with plenty of upside potential in Australia’s export markets. That optimism is shared by Lachlan Marshall, who runs the Yurunga Farms Partnership, a diary and cattle operation near Deniliquin. He joins Phil and Lea to talk about how he is using mechanisation and data to drive efficiencies, that enhance the productivity and long-term viability of his farm. “I’m scaling up to thrive rather than survive, he says on this week’s Weekend Edition.

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Friday 15th March 2024

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Reality is starting to bite. Pesky inflation is taking longer to come down, even as other data is showing slower economic growth. NAB’s Ken Crompton says its only one day, but stronger producer prices and slower retail growth is your classic stagflation data print. It’s clearly too early to make that call, but markets are worried, with equities taking a hit and expectations falling further for a rate cut in June. Bond yields have oved markedly higher, although oil prices are rising as the IEA forecasts stronger demand this year, which hardly fits the stagflation argument. But clearly, whatever the outcome, it’s taking longer to get there!

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Wednesday 13th March 2024

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Another big auction overnight showed strong appetite from investors for long-dated US bonds. NAB’s Gavin Friend says the resilience in US data refuses to give up and the timeline for when the Fed will cut rates continues to get pushed back. Markets are not even fully pricing a cut in June now and there’s the question as to whether the Fed dot plot next week will drop to two cuts this year. Meanwhile, expectations are rising for a rate rise by the BoJ next week, as wage negotiations in Japan show many workers are seeing pay rises in excess of 5 percent. Gavin talks through the likely impacts on currency markets.

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Wednesday 13th March 2024

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US inflation came in hotter than expected ion data out overnight, but NAB’s Taylor Nugent says it was only marginally above expectations, rounding just makes it seem worth. It’s not changing expectations for a June cut, he says. The NAB Business Survey provided more signs of why the RBA isn’t in any rush to cut rates, with a reacceleration in business conditions. We also discuss what was said by the RBA’s Sarah Hunter yesterday, the weakness in UK jobs and a Bloomberg story that has the BoJ on the cusp of lifting rates.

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Tuesday 12th March 2024

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US CPI is out today. A core monthly read of 0.3 percent is expected. JBWere’s Sally Auld says that’s too high to meet the Fed’s target so we’ll need to see CPI down to 0.2 percent over successive months before they can be certain they are on track. Japan’s GDP growth was lower than expected, although the country is now officially out of recession, but only by the tiniest margin. Could the BoJ really be planning rate hikes in such an environment? Iron ore prices took a hit overnight, whilst gold and Bitcoin are at or near all time highs. There’s clearly a lot of uncertainty out there.

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Monday 11th March 2024

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US payrolls data was initially a surprise on Friday. NAB’s Ray Attrill says there was an initial algo-driven market response, before the human s stepped in on realising that substantial downward revisions in the previous two months meant jobs data was weaker than anticipated. Hence, expectations for a June cut haven’t really shifted. Canada’s employment data, which was higher, passed by with little fanfare. China’s inflation numbers were a surprise over the weekend, coming in at the highest month on month level in a year. Japan’s GDP read is expected to be revised higher today, but the biggest influence on the BoJ strategy will come later this week with the early results of spring wage negotiations.

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Friday 18th March 2024

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You would be right in assuming that equality for women is less prevalent in Japan than it is in Australia. There are 200 listed companies on the Nikkei who don’t have a single female board member. But things are changing. Melanie Brock is an Australian who has lived in Tokyo for 25 years, helping businesses invest and partner in Japan. She serves on four boards, having just been appointed to Asahi Group Holdings. Today she talks through the challenges women face, but also why the economy depends on the career advancement of women. And there’s at least one lesson Australian businesses can learn from Japan about how to advance diversity in the workforce.

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Friday 8tth March 2024

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NAB’s Gavin Friend says you only need to look at the falls we’ve been experiencing in yields lately to recognise that there’s a renewed acceptance that rates will be cut, probably by the middle of the year, in the US and Europe. At the ECB meeting Christine Lagarde talked about good progress being made on bringing down inflation, as they released a downgraded inflation forecast. In front of the sente Banking Committee in the US Jerome Powell talked about not being far from having the confidence to cut rates. That’s why all eyes are back on June. Of course, a surprise result in non-farm payrolls tonight could easily change all that.

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