NAB Morning Call

Wednesday 7th JUne 2023

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The RBA lifted interest rates yesterday, against the prevalent market expectation. NAB’s Taylor Nugent says it was always a question of “when and not if”, but now there are expectations of at least one follow-up hike at some point this year. The reason, obviously is the central bank’s concerns over persistently high inflation, which OECD numbers yesterday showed was a persistent theme across the developed world. So, the questions ofr today – what will Philip Lowe say at his speech (with Q&A session) in Sydney this morning, and what will the Bank of Canada do later. Their decision is also finely balanced.

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Tuesday 6th June 2023

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It's a line-ball call, says NAB’s Ray Attrill, as to whether the RBA will lift rates or not today. Markets have priced in a follow-up to the May rise, the question is whether it happens today or in a subsequent meeting. We look at the scenarios on today’s podcast. Plus, a weaker services sector in the US. Does that change expectations for the Fed? And oil responds to the OPEC+ cuts by Saudi Arabia, but the gains don’t last long.

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Monday 5th June 2023

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With debt ceiling concerns taken away, its back to worrying about inflation and wondering how far central banks will push. NAB’s Rodrigo Catril says it’s still likely thew RBA will pause tomorrow, but a higher-than-expected rise in award wages in Australia on Friday have increased the chance that there will be a hike as soon as tomorrow. The Bank of Canada faces the same dilemma, hike again or hold and see? Oil is expected to rise today after the OPEC+ meeting over the weekend, when Saudi Arabia volunteered a million barrels a day cut in production.

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Friday 2nd June 2023

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It's surprising that the markets have reacted so sharply to the passage of the debt ceiling bill. NAB’s David de Garis says there was always an outside chance something would go awry, but it’s already passed through the House and should clear the Senate today. Now the focus is on jobs in the US, with non-farm payrolls tonight. Wage pressure will be a significant focus, whilst at home the consequences of the Fair Work Commission’s award wage decision will be an important factor in determining the rate of inflation.

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Thursday 1st June 2023

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The Aussie dollar has fallen further on the back of weaker than expected PMI data from China. NAB’s Ray Attrill says it adds to the view that the post-COID recovery is losing momentum. Australia was also hit with higher-than-expected inflation numbers yesterday, which has added to the expectations for a quarter percent rate rise by the RBA next week. European inflation reported so far has largely shown the worst might be over, but we get the Euro areas CPI figure today. If the US Fed is looking for an easing labour market there is little sign of it today, with job openings up and the Beige book reporting companies continuing to find it difficult to recruit people. There is plenty more US jobs data to come this week.

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Wednesday 31st May 2023

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Once it’s over the hurdle of the US House Rules Committee, which is happening right now. NAB’s Rodrigo Catril says the feeling is that will pass easily and sets the scene for the vote in the House tomorrow. But many of the market moves are more to do with concerns of an economic downturn, as central banks push harder. That will certainly be the tone of questions RBA Governor Philip Lowe faces when he is in front of the Senate Economics Committee this morning. We also get Australian inflation data today, and numbers for France, Germany and Italy.

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Tuesday 30th May 2023

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The timetable to sign off the agreement to raise the US debt ceiling is very tight. Does it matter if it’s a day or two late? "Not really", says NAB’s Tapas Strickland in today’s podcast, although it might make the markets nervous for a while. A bigger question is what happens beyond that, as the administration plays catch-up on the issuance of Treasury Bills. Also today, we look at the impact of the Fair Work Commission’s decision on minimum and award wages. At what point does the increase become problematic for the RBA?

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Monday 29th May 2023

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The Democrats and Republicans reckon they have struck a deal over the US debt ceiling, which involves no growth in non-military government spending next year. The deal, could be voted on as soon as Wednesday, just in the nick of time, although as NAB’s Taylor Nugent pints out, Janet Yellen has revised the date for when the money runs out to June 6th. It’s not a done deal, of course, but we started to see early optimism reflected in markets in Friday and there’s no reason why that wouldn’t continue today, except the US and UK markets are largely closed for public holidays. Friday also showed resilience in US inflation and consumption, which has added to the likelihood of a Fed rate rise next month. Non-farm payrolls on Friday will be a key release for that too.

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Friday 26th May 2023

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There is still no resolution on the US debt ceiling. NAB’s Gavin Friend talks about where markets go from here. Right now, it doesn’t seem to be worrying US equity markets, which have jumped on the forecasts from NVIDIA of am AI-led recovery in chip demands, pushing the company close to a one-billion-dollar valuation. Economc data overnight has shown an upside in the US, but a deterioration in Europe, with Germany having been in a recession for the last two quarters. Still, central banks are talking up the need to do more. Today Australian and UK retail numbers and more measures of inflation, the US PCE deflator and the Tokyo CPI print, which could be an uncomfortable read for the Bank of Japan. 

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Thursday 25th May 2023

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McCarthy and Biden finished their four hour talks on Wednesday with no resolution on the debt ceiling. Their division over spending continues to concern markets. NAB’s Ray Attrill looks at the market response, with a deal needed by the end of the week to allow time for the legislative process to run its course. There’s division within the FOMC too, evidenced by the latest minutes. There;’s also been a couple of surprises in the last 24 hours – the RBNZ indication that they may have stopped lifted rates, and the UK’s worrying inflation numbers now raising the possibility of a 50bp rate hike next time by the Bank of England. And rate hikes from the RBA might still have a way to go after Philip Lowe’s meeting with legislators. 

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