NAB Morning Call

Friday 13th August 2021There was very little movement in the markets overnight, with thing trading during the northern summer, compounded by any significant news. Bond yields have edged higher, with another successful auction, whilst equities have ground higher, with new highs for the S&P. NAB’s Gavin Friend says we’re at the point of the month when things quieten down. Even news of more regulatio...

Thursday 12th August 2021US CPI eased in July. NAB’s David de Garis says it was helped by less pressure on used car prices and airline fares, whilst food prices remain elevated. It means the Fed can focus on reaching their employment target, whatever that target is. In a speech overnight Raphael Bostic suggested it wasn’t just about hitting full employment, it was also about fixing the inequality...

Wednesday 11th August 2021Markets are a little more optimistic today, but there seems little rhyme nor reason. NAB’s Ray Attrill says oil has bounced back, seemingly ignoring yesterdays concerns about slowing demand from China in light of COVID cases and lockdowns, even though the situation is only getting worse. The NAB Business Survey demonstrates the extent of the situation in Australia. Could...

Tuesday 10th August 2021The UN chief has called the latest IPCC report on climate change “a code red for humanity”. The shorter timeframes for rising temperatures has not had any market influence. NAB’s Tapas Strickland says, instead, the focus has been split between how quickly the Fed will introduce tapering, and concerns over whether the recovery will slow, with rising cases and more lockdowns....

Monday 9th August 2021There was a strong market reaction to Friday’s non-farm payrolls in the US, which NAB’s Rodrigo Catril says was at the top end of a broad range of expectations. The question is, does this represent the substantial progress that the FOMC is looking for before tapering bond purchases. It depends on which Fed member you are listening to. We’ve seen the response to the jobs numbe...

Friday 6th August 2021I amongst the mixed data from the US – including signs that the job recovery is slowing - and the varied opinions of central bankers, take a look at what’s happening in Germany. Factory orders came bouncing back in June and Google mobility data is showing most people are heading back to work. NAB’s Gavin Friend says this adds to the strong GDP numbers last week. The extent to...

Thursday 5th August 2021The New Zealand unemployment rate has fallen sharply, adding more to the expectation that the RBNZ will lift interest rates next month. NAB’s David de Garis says the markets have now priced it in at more than 100 percent. US jobs, however, are taking longer to recover. The ADP employment report saw far fewer new jobs than expected. Although all eyes are on the more credible...

Wednesday 4th August 2021Central banks seem to be taking a very optimistic view of the rate of recovery right now. The RBA has decided it will push ahead with its tapering of asset purchases, despite the protracted Sydney lockdown. The RBNZ’s Governor Orr has as good as said that the central bank will lift interest rates next month. The direction taken by the US Fed will be dependent on jobs numbe...

Tuesday 3rd August 2021There was a sharp drop in Treasury yields soon after the release of the ISM Manufacturing numbers from the US. The expectation was that they would rise slightly, but they actually fell. Although still in expansionary territory NAB’s Rodrigo Catril says it adds to the narrative that the speed of recovery is slowing. It was compounded further with weaker Caixin PMI manufacturi...

Monday 2nd August 2021Iron ore prices fell below U$200 on Friday as China indicated that they would be cutting demand. It hit the Aussie dollar on Friday, which was already suffering as virus cases mounted in several parts of the country and no immediate escape plan for the Sydney lockdown. Today, Phil Dobbie asks NAB’s Ray Attrill whether the Aussie dollar could fall to 73 cents again this week,...

Friday 30th July 2021Markets have had a chance to absorb the dovish sentiment from the Fed yesterday and take stock of mixed data overnight. On the surface US GDP numbers looked weaker than anticipated, but a chunk of that was influenced by lower inventory and trade numbers. NAB’s Gavin Friend explains how consumption and investment was actually much higher than anticipated. He says we can expect...

Thursday 29th July 2021There was a tame response to the FOMC statement this morning, but a more marked reaction during the press conference that followed. NAB’s David de Garis says the turning point was Powell’s remark that there was some ground to cover when it came to reaching full employment. Also on today’s podcast, discussion on yesterday’s Aussie CPI numbers, and how the widening trade defic...

Wednesday 28th July 2021Whilst US equities edged to all-time highs, the real yields on US Treasuries sank to new lows. NAB’s Rodrigo Catril talks about how expectations for tapering by the Fed could be pushed back, as the recovery slows. The take-up of vaccines in the US isn’t helping, with the seven-day average of daily jabs now at the lowest level since early January. In the UK infection rates a...

Tuesday 27th July 2021Whilst US equities edged to all-time highs, the real yields on US Treasuries sank to new lows. NAB’s Rodrigo Catril talks about how expectations for tapering by the Fed could be pushed back, as the recovery slows. The take-up of vaccines in the US isn’t helping, with the seven-day average of daily jabs now at the lowest level since early January. In the UK infection rates are...

Monday 26th July 2021Last week markets were pulled between concerns over the rise of the Delta variant and the encouragement of strong corporate earnings data. This week could go either way, with significant earnings to come, and mixed opinions on the direction the virus will take. In today’s podcast NAB’s Tapas Strickland looks at the latest vaccine efficacy numbers and the influence on the Aussi...

Friday 23rd July 2021Equities have been helped by earnings results and a little less COVID concern. On the macro front US jobless claims rose unexpectedly, but NAB’s Gavin Friend says a lot of it will be to do with seasonal adjustments related to the annual auto-tooling shutdowns. The ECB held its first meeting since it’s new straight 2 percent target, but little will change in the short term. The...

Thursday 22nd July 2021The rebound from the COVID concerns at the start of the week is now complete, with bond yields rebounding further overnight, equities bouncing higher and commodities on the rise. NAB’s David de Garis talks about how businesses are seeing the recovery happen, even where he is in London. Globally, it seems the expectation is that COIVD won’t hinder a global recovery, particula...

Wednesday 21st July 2021Curiously, much of the negative market reaction at the start of the week has seen a reversal in the last 24 hours, even though the reasons for the concern remain. The Delta variant continues to spread, vaccination rates have slowed, and case numbers are rising. Phil Dobbie asks NAB’s Ray Attrill if he can explain the switch in direction, with the response far stronger for e...

Tuesday 20th July 2021There’s not been a lot of economic data around, but markets have dipped sharply on the back of rising COVID cases. NABs Tapas Strickland says its being driven by the preponderance of the Delta variant. Oil is also down, in part because of the OPEC deal discussed yesterday, but also expectations of a slower global economic recovery and less international travel. Further tensio...

Monday 19th July 2021OPEC reached a deal of sorts over the weekend which will see supplies increase incrementally over the next few months. NAB’s Rodrigo Catril said markets had been expecting a deal of this magnitude, so it has done little (so far) to oil prices. Meanwhile, COVID caution continues to rein over the markets, with a stronger US dollar and a weaker Aussie. US retail numbers were stro...

Friday 16th July 2021Markets returned to a more cautious outlook overnight, with US equities losing ground and bond yields falling. As NAB’s David de Garis explains, its difficult to find any particular reason for the change in sentiment, other than a return to concerns over COVID and the speed of economic recovery. There wasn’t anything in day two of Jerome Powell’s testimonies to cause concern a...

Thursday 15th July 2021There’s a world of difference in the approaches being taken by central banks in response to the COVID recovery. NAB’s Gavin Friend talks through some of them, starting with the RBNZ announcing bond buying will end next week, leaving the door open for rate rises as soon as August. The Bank of Canada is also tapering its asset purchases. Yet, as inflation rises, the Fed’s Jero...

Wednesday 14th July 2021US inflation has surprised again. It was expected to ease back after the 5% jump last month, but this time its higher still. Phil Dobbie asks NAB’s Tapas Strickland whether this will be enough for the Fed to be forced into tapering sooner than intended, or is it still transitory? As luck would have it, Jerome Powell is talking to Congress later today, so maybe we’ll get an...

Tuesday 13th July 2021US stocks hit new highs as Q2 earnings season kicks off. NAB’s said it also reflects a recovery from Asia emanating from China’s easing of reserve requirements. China will be a focus today, too, with the release of trade data. US CPI is also out today. Could a combination of weaker earnings reports, a fall in trade to and from China and/or a higher-than-expected CPI dampen th...

Monday 12th July 2021For most of last week markets grew increasingly cautious about the spread of the Delta variant and fears of further lockdowns in major economies, Australia included. On Friday, though, that all changed, with bond yields rising, equities breaking new highs, the US dollar back on the rise, but the Aussie also doing well along with other commodity currencies. This morning, NAB’s...