NAB Morning Call

Monday 29th November 2021There was a very strong market response to the news of the Omicron virus strain on Friday. Equities were hit hard, currencies ran for the shelter of safe havens and there was a sharp fall in bond yields. How much of this was a knee-jerk reaction amongst the thin trading on the day after Thanksgiving. NAB’s Rodrigo Catril says we can expect Asian markets to follow the US to...

Friday 26th November 2021As America gobbles up Turkeys NAB’s Gavi Friend talks through the latest positioning on tightening by central banks. The FOMC minutes suggested a more hawkish approach, and the latest data would suggest that view has been reinforced, but there’s still a disconnect between what the markets expect and the messaging from the Fed. The Riksbank has started to talk about rate ri...

Thursday 25th November 2021There were many more positive signs for the US economy overnight, with initial jobless claims at an all-time low. The US dollar remains in favour, with the DXY index reaching a 16-month high. On today’s podcast NAB’s Tapas Strickland says rising inflation concerns are turning even the most dovish FOMC members, with Mary Daly the latest calling for a faster taper to make...

Wednesday 24th November 2021There was a surprise for those expecting the PMI numbers on Tuesday to confirm the widening gap between US and European economic performance. Let’s be honest, the NAB Morning Call team were amongst those who weren’t expecting to see the narrowing of the divide, with Europe doing somewhat better than expected, and the US a little worse than forecast. But NAB’s David de G...

Tuesday 23rd November 2021The US dollar and bond yields rose on the news that Jerome Powell is to keep the top job at the Fed for another term, with Lael Brainard as deputy. Even though both are doves, NAB’s Ray Attrill says the market still has two or three rate rises priced in for next year. The Aussie dollar has avoided collateral damage from the raising US dollar, helped by the news of border...

Monday 22nd November 2021The divide between the US and Europe became more pronounced at the end of last week, as NAB’s Rodrigo Catril explains 0n today’s Morning Call. On the one side of the Atlantic there are increasing infections, more lockdowns and, in Austria, mandatory vaccines, with a central bank pushing the line that tightening will only damage the recovery. On the other side, central bank...

Friday 19th November 2021US equities have bounced back a little today, but, as NAB’s Gavi Friend describes, it’s been a session without significant event risk or data flow. Equities and bond yields have been stable compared to recent volatility, with the tech sector contributing to equity rises, including news of Apple’s self-drive car. Some companies are also reporting easing of supply chain diff...

Thursday 18th November 2021Australian wage growth is in line with expectations, but where to from here? Phil Dobbie asks NAB’s Ivan Colhoun if there’s a chance we’ll see wages escalate in the next few months? The UK’s inflation numbers surprised everyone overnight, reaching 4.2 percent year on year. Does this concrete in a BoE rate rise, or could they do what they did last time and do nothing? Dav...

Wednesday 17th November 2021It’s been a positive session overnight, with US retail sales rising and US jobs bouncing back. NAB’s Tapas Strickland says it’s difficult to tell how much of the 1.7% month on month increase in sales is a result of rising prices and how much is more goods sold, but it shows consumers are prepared to spend even with supply constraints and inflation concerns. The UK jobs...

Tuesday 16th November 2021The Euro has lost ground this morning, with concerns over COVID, following lockdowns in Holland and Austria, and rising cases in Germany. There remains a very different attitude between the ECB and the Fed, with Christine Lagarde reiterating that in Europe they are in no rush to tighten policy. China’s activity data provided hope that the country’s economy was stabilising...

Friday 15th November 2021Hot on the heels of the surprising increase in inflation in the US earlier last week, Friday saw an unexpected fall in consumer sentiment. The Michigan survey hit an 11-year low. NAB’s Ray Attrill says previous low readings had been associated with rising COVID cases, but now, as the US seems to be faring somewhat better than Europe, the concern is all about rising prices....

Friday 12th November 2021Markets have been a little more positive over the last 24 hours, with the NASDAQ back on the rise, although a rising US dollar continues to hurt the S&P, and the Aussie dollar has taken another hit. Part of the fall in the Aussie can be attributed to the weaker than expected jobs numbers yesterday, but NAB’s David de Garis says when you unpack the numbers there was plenty...

Thursday 11th November 2021The inflation numbers from the US have been eye popping. That’s the description by the Fed’s Mary Daly as US CPI hits 6.2%, a 30 year high. NAB’s Gavin Friend points out that there are still four million people in the US who lost their jobs through COVID who aren’t back in the workforce, and the Fed will continue to use that reasoning for not lifting rates. But markets a...

Wednesday 10th November 2021There’s been a move away from risk assets. It could just be equity markets running out of steam after a particularly strong rally, but a Financial Stability Report from the fed warning of “perilous lunges for risky assets” probably didn’t help. NAB’s Ray Attrill says it’s hard to join all the dots right now about why the mood has shifted, but inflation continues to be a...

Tuesday 9th November 2021You’d think markets would be bathed in positivity, particularly in the US, with a string of good news, including infrastructure spending, the COVID pill and the reopening of a lot of international travel. There’s evidence of tiredness in the equity market says NAB’s Rodrigo Catril in today’s podcast, but we’ve been here before and then it takes off again. Bond yields meanw...

Monday 8th November 2021You might expect a little more optimism in the markets given Friday’s strong non-farm payrolls data in the US, Pfizer’s news about a pill for COVID sufferers, the passing of Biden’s $1.2 billion infrastructure bill and rising consumer credit in the US. Equity markets are riding high on future hopes, but NAB’s Tapas Strickland says bond markets continue to unwind from expect...

Friday 5th November 2021There has been a sharp response in bond yields and currency markets to the Bank of England’s decision not to lift interest rates. Furthermore, Andrew Bailey is suggesting he doesn’t know where everyone got the idea that they would. NAB’s Gavin Friend says the response has been very marked. The fall in yields is pushing riskier assets, hence new highs for the S&P and NASDAQ....

Thursday 4th November 2021There weren’t any surprises in from the FOMC this morning. The Fed will cut asset purchases by $15 billion this month, with a further $15 billion in December, and an expectation that it will continue until the middle of next year. But Jerome Powell was again quick to point out that the tapering does not imply “any direct signal on interest rate policy”. Phil Dobbie talks...

Wednesday 3rd November 2021Central banks are still grappling with what to do about inflation. The RBA is reluctant to talk about interest rate hikes anytime soon, because they don’t think inflation will be a big problem. The Fed and the Bank of England take a different view, but how hawkish will they be. Today on the Morning Call NAB’s Tapas Strickland looks back at yesterday’s RBA meeting and loo...

Tuesday 2nd November 2021For once we are going into an RBA meeting unsure of what the outcome will be. NAB’s Ray Attrill says we have as much chance of predicting a winner in the Cup today as we do forecasting what direction the central bank will take. Meanwhile bond yields in Europe are being driven by the next central bank meeting – will the ECB abandon its PEPP program? Plus, more evidence of t...

Monday 1st November 2021There were more big moves in Australian bond yields on Friday as the RBA failed to buy up the April 2024 bonds that were the focus of its yield curve control (YCC) policy. So does that mean YCC is dead? NAB’s Rodrigo Catril says, yes it is. It has become dysfunctional, given the force we have seen from markets pushing front end yields higher around the globe. It should make...

Friday 29th October 2021Three year bond yields rose well above the RBA’s target of 0.1 percent yesterday, but the central bank didn’t buy any up as part of its yield control. That pushed yields even higher. So will they react today? NAB’s David de Garis doesn’t think the bank will ditch yield control, but it’ll make next week’s policy meeting that much more interesting. Christine Lagarde said ther...

Thursday 28th October 2021There have been sharp movements in bond yields, with front end yields rising and falls at the back end. NAB’s Gavin Friend says it reflects expectations that rising inflation will force central banks to raise rates sooner. We saw a higher-than-expected rise in Australian inflation yesterday and 2 year yields rose sharply overnight. Guy Debelle is in front of senate estima...

Wednesday 27th October 2021Former US Treasury Secretary Larry Summers took to Twitter yesterday to challenge Janet Yellen over inflation policy, suggesting the risk of losing control of it is higher than at any time in his career. Today, NAB’s Rodrigo Catril talks more about the rising inflation sentiment, with inflation expectations in the US now at a 13 year high. The expectation of a rate hike...

Tuesday 26th October 2021The markets continue to be dominated by rising inflation concerns, including the price of oil. WTI got over $85 today, but has fallen back since. NAB’s Tapas Strickland tells how Saudi Prince Abdulaziz bin Salman has said it’s too early to up production whilst uncertainty prevails. There was an example of that uncertainty as another Chinese province went into lockdown. But...