NAB Morning Call

Monday 25th October 2021Comments from Jerome Powell added to the volatility in bond markets on Friday. The chair of the Fed reinforced that it was time to taper, but suggested rate rises would have to wait, with more than five million people who were working before the pandemic still unemployed. The labour market needs time to heal, he said. NAB’s Ray Attrill says it shows that he is less inclined...

A sharp fall in commodity prices hasn’t dampening inflation expectations, and with it the assumption that central banks will bring interest rates forward. NAB’s David de Garis says it’s been a day when bond markets in particular have particularly been bitten the inflation bug, with pricing suggesting inflation will average three percent over the next five years, even higher in the UK. Two surveys...

Thursday 21st October 2021Equities are rising to new highs as risk sentiment improves on the back of strong earnings results in the US, even though inflation remains an ever-present concern. NAB’s David de Garis says the Fed’s Beige Book, out this morning, highlights how many companies are convinced they can pass on their increased costs, with consumers paying through increased wages. If that’s th...

Wednesday 20th October 2021US equities have had a strong session, although Procter and Gamble weas one of the first major household companies to highlight margin squeeze from supply chain difficulties. Netflix earnings are expected to be strong thanks in part to the success Squid Game. Meanwhile the tentacles of inflation continue to worry policy makers almost the world over – the RBA being one of...

Tuesday 19th October 2021Bond yields are higher globally as inflation concerns mount. New Zealand’s CPI read (2.2% QoQ) sent 10 year yields up 16 basis points, spilling over to Australia. But NAB’s Rodrigo Catril says the inflationary pressures haven’t yet arrived in Australia which means the RBA will lag other central banks when it comes to rate hikes. Meanwhile, China is showing signs of a signi...

Monday 18th October 2021Equity markets were buoyed by strong US earnings results and stronger than expected retail sales numbers, but there are many reasons to suggest this confidence might be short-lived, according to NAB’s Tapas Strickland. Corporate earnings have been focused on the finance sector, so results from other sectors will give an indication of the inflation impacts on margins and gro...

Friday 15th October 2021Markets have taken a more positive outlook overnight, with sharp rises in equities in the US and Europe. NAB’s Gavin Friend says it’s been helped by falling bond yields, showing that there’s less immediate concern about rising inflation. That doesn’t mean the problem has gone away, but company earning results in the US have been positive, and there will be some solace in th...

Thursday 14th October 2021US CPI numbers were a little higher than anticipated. NAB’s David de Garis says we did see some support for bond yields, but markets slipped back when it was realised the core inflation number was pretty line-ball with expectations. As we’re seeing around the world, prices are being influenced by fuel, supply chains and wages. This morning’s FOMC minutes contained nothing...

Wednesday 13th October 2021The IMF released revised forecasts overnight, together with a warning that central banks need to tighten their monetary policy if inflation persists. Inflation concerns are certainly growing, backed with evidence in numerous surveys. 30% of small business owners in the US said they expect to lift wages, according to the latest NFIB survey. The latest jobs data for the US...

Tuesday 12th October 2021Fuel prices are rising, with the gas crisis now pushing up oil and coal prices. On today’s podcast NAB’s Tapas Strickland says central banks are now worried about inflation getting “permanently embedded” (Andrew Bailey’s words) and are becoming more hawkish in their outlook. The latest is the Bank of England, where markets are already pricing in a 50 percent chance of a sm...

Monday 11th October 2021Non-farm payrolls numbers from the US on Friday were less than expected, but NAB’s Rodrigo Catril says the numbers weren’t as bad as they seem, because they included an upward revision in the month before. The expectation is that the Fed will push ahead with tapering of bond purchases later in the year, with bond yields rising around the world, to multi-year highs in some c...

Friday 8th October 2021Two cans are being kicked. The US debt ceiling can is being kicked into December, but the issues remain. The gas can has been kicked along by a promise of more fuel from Russia, but isn’t Europe’s dependency on Russia part of the problem? Meanwhile, the Bank of England’s new chief economist is warning of inflation for longer. Is he positioning for a rate rise? NAB’s David de...

Thursday 7th October 2021The fuel crisis in Europe and the UK is impacting global markets, with shares taking a hit. There’s been no rush to bonds given the impending inflation concerns, worsened by fuel prices, and most currencies are losing against the US dollar, which is possibly the only safe-haven left right now. It’s been a rollercoaster day, says NAB’s Gavin Friend, with energy prices in th...

Wednesday 6th October 2021The currency markets suggest there’s a risk on mood this morning, with the US dollar gaining on the Japanese Yen and Swiss Franc. Strong non-manufacturing ISM numbers in the US have helped with that. But oil prices continue to rise too, adding to inflation concerns. Yet tech stocks have risen as well. NAB’s Rodrigo Catril joins Phil Dobbie to help explain market positions...

Tuesday 5th October 2021Oil prices rose quickly this morning after OPEC+ announced they would stick with their earlier plans of rising production in November by 400 thousand barrels a day. At one stage Brent and WTI were both up more than 3 percent. NAB’s Ray Attrill says it was a surprising response, because there wasn’t a particular expectation that they would rise production. Nonetheless it has...

Friday 1st October 2021There’s a fair bit to chew on today, with commodity currencies helped by word from China that they must secure enough energy for winter, whatever the cost. The US has managed to agree an interim budget for now, but the debt ceiling remains an issue and will remain so until the very last minute. Jerome Powell pontificated in his congressional hearing about what to do if high...

Thursday 30th September 2021Markets are much calmer this morning. Equities have managed to climb a little, with the biggest moves in currencies and commodities. NAB’s David de Garis says there’s debate about whether we’re heading to reflation, deflation or stagflation, or all of the above. The Aussie dollar lost more ground, but the pound is taking more of a hammering as fuel shortages will almost...

Wednesday 29th September 2021It seems like it was a fairly heated Senate Banking Committee meeting in the US overnight. Flags were raised about whether Jerome Powell will win another term as Governor of the Fed, given the background of yesterday’s resignations and with one Democrat Senator overnight calling him ‘dangerous’. The US debt ceiling is also causing concern, with it being used as a barga...

Tuesday 28th September 2021It seems markets are still trading on the hawkishness of central banks, particularly the Fed, where we’re seeing bond yields significantly higher and tech stocks weakening. Commodity prices are also pushing higher globally, with Brent Crude now close to $80 a barrel. NAB’s Gavin Friend in London says these extra costs, plus supply constraints make it highly unlikely that...

Monday 27th September 2021Last week was a very volatile week, driven by the uncertainty over Evergrande, the unexpected hawkishness of central banks, continued concerns over supply chains and the emerging fuel crisis in the UK and Europe. This week you can add the USD debt ceiling to the list of concerns. NAB’s Ray Attrill says without a stop gap funding resolution we could be going into the weeke...

Friday 24th September 2021There’s been a big shift to risk-on overnight, with equities rising and bonds falling, pushing yields much higher in the US and across Europe. But why? The risk of Evergrande remains and with the Fed eyeing jobs data, a rise in weekly jobless claims was hardly a good sign this morning. NAB’s Gavin Friend says part of it is a reaction to the clearer roadmap for the Fed, as...

Thursday 23rd September 2021As expected, the Fed didn’t give a specific date for the start of tapering, but suggested it should all be done by the middle of next year. NAB’s David de Garis says the bank has also moved forward its expectations for rate rises, with the board split on a rise as soon as next year. The Norges Bank is well ahead of them tonight, likely to be the first G20 central bank t...

Wednesday 22nd September 2021Markets are still concerned over the Evergrande debacle, although equities and currencies and bonds have all calmed down a little overnight. China has been on holiday so far this week, so today could provide news on the government’s response before the develop defaults on its bond interest payments. There will be strong interest I the Fed tomorrow morning, of course, b...

Tuesday 21st September 2021Markets have been running for cover overnight over fears that a default by Evergrande could spread beyond the Chinese property sector to the rest of the world. NAB’s Ray Attrill talks through the response, which has seen equities ditched in favour of bonds, and the money markets running to the Yen and Swiss Franc. But it’s the pound that has fared the worst overnight as...

Monday 20th September 2021There’s more caution in the markets as we kick off a week doinated by central banks – the US Fed, BoE, BoJ, Swiss National Bank, Riksbank, Norgesbank all meeting, but NAB’s Tapas Strickland says it’s the US Fed that has markets on a bit of a holding pattern. There will be particular interest in the mapping of dot points this week. On the podcast there’s discussion about t...