NAB Morning Call

Thursday 27th January 2022The FOMC has met and reaffirmed that rates will rise from March. NAB’s David de Garis says it was exactly what the markets were expecting, although the response has been a rise in yields and a fall in equities. Jerome Powell was more reticent to talk about the speed of tightening beyond the next meeting, given the uncertainties that remain. The Bank of Canada will also hi...

Tuesday 25th January 2022Markets have been gearing up for the FOMC meeting this week, but for a while at least tensions over Ukraine seem to have driven a strong risk-off push, with significant falls in share prices, a fall in bond yields and, to an extent, the US dollar seen as a safe-haven. But as the session progressed there was some re-evaluation of the risk, with shares and bond yields regain...

Monday 24th January 2022On today's podcast:Curiously bond yields retreated at the end of last week even though the assumption remains that the Fed will signal a March hike. NAB’s Tapas Strickland says the fall in yields is a response to the sharp sell-off in equities at the end of the week which is, itself, a response to the rising interest rate environment. Locally, the CPI numbers for Australia...

Friday 21st January 2022Australia’s job numbers were well above expectations yesterday. NAB’s Ivan Colhoun talks about what this means for the RBA, who are still at odds with the market on their timetable for rate hikes. NAB’s David de Garis in London talks about the move up in equities and bond prices this session, suggesting it is likely to be nothing more than a bounce. The expectation is still...

Thursday 20th January 2021The sell-off of US bonds has halted, temporarily, but it continues in Europe, particularly in the UK where high inflation numbers will heighten the Bank of England’s resolve to raise rates next month. Canada also reported a higher-than-expected level of CPI, increasing the expectation for a rate rise there next week. In Germany, 10-year bund yields moved into positive ter...

Wednesday 19th January 2021US bond yields are now at their highest levels for two years, with equities now joining the sell-off, particularly for tech stocks on expectations of rising bank rates. NAB’s Rodrigo Catril says markets oil is also rising sharply on the expected rise in demand in a post-COVID area, or at least a time when we learn to live with the virus. The UK has shown how that can be...

Tuesday 18th January 2022Bond yields continue to rise as expectations heighten for faster central bank tightening. As NAB’s Tapas Strickland discusses on today’s Morning Call, the exception is the People’s Bank of China, which lowered rates yesterday on concerns about the spread of Omicron. President Xi has asked other central banks to sit tight, but that seems unlikely. Even the RBA is likely to...

Monday 17th January 2022The Fed kicks of its schedule of FOMC meetings next week. We know tackling inflation will be front and centre, but as NAB’s Ray Attrill points out, rate hikes are not the only tool they will be using. The minutes from the last meeting also suggest reducing their balance sheet will be part of the plan. Meanwhile, we’ve seen a significant sell-off in bonds, as investors expec...

Wednesday 22nd December 2021There was a lot more positive sentiment in the markets overnight. NAB’s Rodrigo Catril says it’s all down to Omicron news, with infection rates falling in South Africa and hopes that a pill can stave off the worst for people who catch it. If the news remains as positive as all that, how will markets fare in 2022? How quickly will China bounce back, given their zero-COVI...

Tuesday 21st December 2021Energy markets are dominating market moves in the run up to Christmas. Oil prices have fallen significantly on fears that travel demand will fall as Omicron gains strength, whilst gas prices in Europe continue to rise on supply constraints from Russia. Equiites have also been hit hard by the virus uncertainty, on thinner holiday trading. NAB’s Ray Attrill says US numbers...

Monday 20th December 2021Markets are very cautious ahead of the Christmas break, with concerns about the impact of the Omicron strain. The Netherlands has gone into another lockdown and restrictions are being introduced in many other parts of Europe. But that’s not stopping a more hawkish attitude from the FOMC. NAB’s Tapas Strickland says a March hike in the US is a real possibility, with Fed Gov...

Friday 17th December 2021A rate rise by the Bank of England has surprised many, particularly in an environment of record COVID infections, and a hospitality industry calling for government support as pre-Christmas demand collapses. NAB’s Gavin Friend says it had been clear since August that they wanted to lift rates, the only reason for the delay was a question mark over whether employment numbers...

Thursday 16th December 2021The Fed, not surprisingly, are tapering faster as the race is on to lift rates next year. NAB’s David de Garis says the QE ending by March clears the decks, with a revised inflation forecast speeding up the expectations of rises. Markets were expecting a hawkish tilt, so they haven’t been surprised. The Bank of England decision is less easy to read later on, with Britain...

Wednesday 15th December 2021Markets are still pulled in two directions. First there’s the continued uncertainty of the new COVID variant, which might be mild (or not), but is spreading like wildfire in the UK right now and the race is on to have booster jabs across the globe. Then there’s the inflation question and how quickly central banks will respond to it. A sharp increase in producer prices i...

Tuesday 14th December 2021There’s a little more caution this morning, with equities down, driven by banks, travel and energy, with stay at home stocks doing better. But NAB’s Tapas Strickland points out, the fall in the S&P is on the back of the 67th record high of 2021 on Friday night. He says we shouldn’t expect too many significant moves ahead of the FOMC, ECB and Bank of England later in the w...

Monday 13th December 2021Markets were trading last week on the basis that the Omicron variant was not as lethal as the Delta strain, even though infections were spreading rapidly. NAB’s Ray Attrill says that’s been the view with central banks too, who are more concerned about inflation than and further impacts from COVID. That said, rising cases in the UK will almost certainly stop the Bank of Eng...

Friday 10th December 2021Things were definitely a bit quieter overnight, with markets stepping back a little as they wait to figure out just what impact Omicron is having, and which way inflation is heading. We get the latest indication on the latter with US CPI number out tonight, but NAB’s Ray Attrill says China’s consistently high producer prices don’t bode well. Also today, how China is trying...

Thursday 9th December 2021Even though equity markets have slowed, bond markets are still reflecting positive sentiment around coping with the Omicron strain. NAB’s Gavin Friend says Pfizer has confirmed views that three jabs will guard against serious illness from the new variant, and yet just now the British Prime Minister, where almost a third of the population have had three jabs, has introduce...

Wednesday 8th December 2021There’s a lot of positive sentiment around this morning. Equities are rising sharply in the US and Europe, oil is up and bond yields are rising. NAB’s Gavin Friend says it’s been driven by the efficacy numbers of a GlaxoSmithKline vaccine, and circumstantial evidence that the Omicron strain might not be that bad for those who have been jabbed. Data wise there were fairly...

Tuesday 7th December 2021US equites are roaring back, so is oil, with bond yields rising again. This newfound optimism has been driven by policy easing measures from China’s central bank, and less concern about the impact of the Omicron strain. It’s still too early to draw definitive conclusions on the virus, says NAB’s Rodrigo Catril, with reports from South Africa that there is a concerning rise...

Monday 6th December 2021Markets were far more cautious on Friday. In part there are still concerns about the new Omicron strain, although circumstantial evidence so far is pointing to it being a milder variant. NAB’s Tapas Strickland says tech stocks were hit the hardest, because there’s growing acceptance that the Fed will push ahead with faster tapering, irrespective of tailwinds. Payrolls numbe...

Friday 3rd December 2021Markets have displayed much mor epositive sentiment in the last 24 hours, but its not lasting. Gains in US equities have fallen away a little, and oil prices have risen sharply and fallen back again. NAB’s Tapas Strickland says Omicron news is mixed – it’s certainly spreading quickly but symptoms of those who are vaccinated appear to be mild. US Treasury yields have flatten...

Thursday 2nd December 2021Markets were choppy again overnight, but there is renewed hope with circumstantial evidence that the Omicron variant might be less severe. A WHO press conference suggested that existing vaccines will be enough to prevent many extreme cases, but we’ll still have to wait for the final verdict. NAB’s David de Garis says that was enough for the focus to shift a little to posi...

Wednesday 1st December 2021You might have expected that Jerome Powell would use the uncertainty of the new COVID strain to downplay the need to adjust the speed of tapering by the Federal Reserve, but instead, addressing the Congress, he talked up the need for faster tapering, to be discussed at the next FOMC meeting. So, what’s brought about this character transformation? NAB’s David de Garis say...

Tuesday 30th November 2021On today’s Morning Call NAB’s Ray Attrill reminds us that the CSIRO’s Dr Rob Grenfell predicted, back in the middle of the year, that about now we would see a variant of COVID spreading from India or Africa. He now says the situation in South Africa is not a good comparator for Australia, and we should watch how it develops in Europe over the next couple of weeks. In the...