NAB Morning Call

Friday 9th July 2021Is it below 2 percent or at 2 percent? The ECB has made subtle changes to its inflation target, but has flatly rejected the Fed approach of average inflation targeting. NAB’s David de Garis explains what’s changed in the ECB’s approach. Plus words from Philip Lowe yesterday about the RBA’s reluctance to shift policy until unemployment is (much) lower. Plus, oil up as US supplie...

Thursday 8th July 2021The FOMC minutes were released this morning, but a more significant central bank release could be out later in the day. Christine Lagarde is said to be released the outcome of the ECB’s extensive strategy review. NAB’s Gavin Friend talks to Phil Dobbie about what’s likely to be in it and how much of it could be market changing. The Fed minutes meanwhile, had little impact on...

Wednesday 7th July 2021Bond yields have fallen markedly as markets adopt a more cautious air. NAB’s Rodrigo Catril says it’s being driven by a number of factors, including weaker than expected ISM services numbers from the US and factory orders from Germany. The main concern in the ISM was the employment data which dropped below 50, reinforcing the belief that there is a constraint in the availabi...

Tuesday 6th July 2021Boris Johnson has told the UK public that they are just two weeks away from removing their masks, getting back to work and forgetting about social distancing. Within reason. Is this why the pound had such a strong day today, on what’s been a quiet session with the US holiday. Today, we know something will change with the RBA. That’s why Philip Lowe has scheduled a press confer...

Monday 5th July 2021Not too strong not too light, that seems to be the view of the non-farm payrolls in the US on Friday. It wasn’t strong enough to signal change in the Fed’s direction says NAB’s Tapas Strickland. At the current pace, he said, it would take eight months to get back to the pre-pandemic level for payrolls. There’s also discussion about changes expected from the RBA tomorrow. It’s b...

Friday 2nd July 2021Markets have been treading water all week waiting for the non-farm payrolls data, particularly in bond yields which hardly moved at all in the last 2 4hours. NAB’s Gavin Friend says there’s been a lot of data for markets to chew over too, some of it below expectations, some of it over. Markets are clearly looking for direction and hoping that payrolls will provide it. In the po...

Thursday 1st July 2021As we’ve mentioned before, central bank speakers are having little influence on the markets since the sharp response to the last FOMC meeting. As David de Garis says on today’s podcast, investors should wait for the evidence, with the non-farm payrolls on Friday the next significant cab off the rank. The ADP numbers overnight were down on April, and could be revised down furt...

Wednesday 30th June 2021Markets have largely moved sideways, pulled between rising confidence numbers in the US and Europe, and concerns about rising cases of the Delta strain. As NAB’s Rodrigo Catril explains, the Conference Board’s labour market differential index, which looks at the ratio between those who see jobs as being plentiful and this finding them hard to get, came in at the highest lev...

Tuesday 29th June 2021A little more cautiousness has crept back into the markets says NAB’s Tapas Strickland, although it might be as much to do with the prelude to the non-farm payrolls numbers at the end of the week as it is to do with rising infection rates as lockdowns. On today’s podcast we look at vaccine numbers and what needs to happen to see economies can on full footing. Plus, Tapas’ tak...

Monday 28th June 2021With Sydney suddenly flung into lockdown, Phil Dobbie asks NAB’s Ray Attrill what the market reaction will be today. One immediate repercussion will be we won’t hear anything from the RBA ahead of next week’s meeting. Markets also open today with the weekend news that Joe Biden has backtracked on his latest stimulus bill. It’s not such a done-deal after all. There’s also discu...

Friday 25th June 2021Joe Biden has struck a deal to push ahead with his infrastructure plan – a much reduced version. That’s helped US equities today. Ahead of that, it was a mixed day on the markets says NAB’s Gavin Friend, as Fed speakers gave mixed views on the duration of inflation and the Fed’s likely response. Data was also mixed, with weekly jobless claims not falling as much as hoped and d...

Thursday 24th April 2021The crawl back from last week’s FOMC surprise is more or less complete. As NAB’s David de Garis points out, Treasury yields are back to where they were just before the Fed met. Equities are back to on the rise and commodities and being driven higher by demand and supply constraints. The reflation trade is back. On today’s podcast we go through the plethora of PMIs from Euro...

Wednesday 23rd June 2021Jerome Powell has been giving is testimony on Capitol Hill and he, like all the Fed speakers over the last 24 hours, has been trying his hardest to calm the markets and reassure them that inflation won’t last, so the Fed won’t be tapering soon or bringing forward rate increases. It seems to be working, with another day of a weakening US dollar and rising equities. This week...

Tuesday 22nd June 2021Well, we did say it was a rather extreme reaction to the FOMC meeting last week. NAB’s Tapas Strickland says the market moves overnight suggest the response was overdone, as markets partially unwound, with the US dollar falling, the yield curve steepening again, US equities up and the Aussie dollar on the rebound. So, what’s driven this rethink and will it last? Will Jerome P...

Monday 21st June 2021The US dollar continued to rise at the end of last week., hitting a two-month high, after the surprisingly bullish outlook from the Fed, but is the Aussie dollar paying too high a price? NAB’s Rodrigo Catril says the Aussie is in the middle of the storm, with the unwinding of the reflation trade pushing US equities and commodities lower. The Aussie dollar broke through a few t...

Friday 18th June 2021The US dollar continued to rise yesterday, after the hawkish comments from the Fed. As David de Grais discusses on today's podcast, it’s impetus was enough to squash any positive currency response to Australia’s employment numbers and New Zealand’s GDP read yesterday, both of which were way higher than anticipated. And yet Philip Lowe continued to set the expectation that Aust...

Thursday 17th June 2021At the FOMC meeting this morning the Fed upped their growth and inflation forecasts, twit the dot plots pointing to rate rises as soon as 2023. It’s a much more hawkish meeting than had been anticipated although, NAB’s Gavin Friend wonders whether enough has changed in the Fed’s forecasts to warrant such a shift. UK CPI is another indicator that exceeded expectations. We’re...

Wednesday 16th June 2021The FOMC meeting is just a day away are markets are being cautious, with little movements in bonds or equities. A weaker than expected set of retail sales numbers has added to the uncertainty. But is there any uncertainty around what the FOMC will say. NAB’s Tapas Strickland says under the hood the retail numbers had some positives, including more evidence of the rotation f...

Tuesday 15th June 2021Oil has hit a two-year high. This morning NAB’s Ray Attrill explains why oil prices could continue to rise. Are we heading for $100 oil? Also, why bond yields are rising again ahead of an FOMC meeting this week where little is expected to happen. And troubling times for Boris Johnson, fighting the EU over the NI protocol, pacifying the US President and announcing a 4 week del...

Friday 11th June 2021US CPI was a higher than expected, but the Market seems to have taken it largely in its stride, although it’s helped push equities higher today. NAB’s David de Garis said the market will be more interested in what the Fed might say next week, after a couple of disappointing payrolls numbers. Meanwhile, the ECB, upped their forecasts but didn’t talk of tapering, except to say t...

Thursday 10th June 2021Bond yields have fallen further overnight, in some cases to levels not seen for several months. NAB’s Tapas Strickland says it could be market positioning, although it could also be related to growing acceptance that any inflation that occurs is transitory. That’s not how the Bank of England’s Andy Haldane sees it though, and China’s PPI numbers shows supply costs are rising...

Wednesday 9th June 2021Inflation fears have eased further, says NAB’s Gavin Friend, with bond yields pushing lower and market volatility easing. That’s despite the JOLTs (job openings) numbers in the US which were high enough for everyone to have a job, but its clear to attract workers companies will have to lift their wages. That was evidenced in the NFIB small business survey overnight too. Mean...

Tuesday 8th June 2021If the non-farm payrolls gave the markets a Goldilocks moment on Friday – with jobs numbers that weren’t too hot or too cold – then maybe markets are already starting to question whether it was exactly what was needed. As NAB’s Ray Attrill points out, US CPI numbers later in the week, and the expectations of them, could tip the balance a little. But, could the speed of recover...

Monday 7th June 2021Not too good, not too bad, that seems to have been the market response to the non-farm payrolls numbers out of the US on Friday. NAB’s Rodrigo Catril says it reinforced the view that the labour market was recovering in the US, but not so fast that it would prompt tapering discussions. The result has been a sharp fall in Treasury yields and a pick-up in risk assets. It’s a diffe...

Friday 4th June 2021On today’s podcast NAB’s Gavin Friend talks through a session that has been in two parts. First off there was the response to a series of strong numbers from the US, including a standout set of employment numbers from the ADP. This positive news added to speculation that the Fed would taper soon rather than later, with the Fed’s Robert Kaplan suggesting they might need to take...