NAB Morning Call

Thursday 3rd June 2021If there’s one takeout from the Fed’s Beige Book overnight, aside from the continued improvement in the US recovery, it was the rising concern about input costs. Even though it’s seems to be accepted wisdom that price pressures from supply chain disruption will be transitory, there’s the question about how that disruption will impact the jobs recovery. NAB’s David de Garis sa...

Wednesday 2nd June 2021The RBA didn’t steer from its earlier stance that it was too soon to be looking at any changes in policy right now. Those who were expecting a more hawkish attitude will have been disappointed. The real surprise yesterday was the strength of the GDP partials in Australia, in particular a record current account surplus. NAB’s Rodrigo Catril says that will translate to a highe...

Tuesday 1st June 2021Markets have been understandably quiet with the US and UK on holiday. China delivered its PMIs, with the manufacturing read a little below expectations, and non-manufacturing a little higher than expected. NABs Tapas Strickland says the new orders component of manufacturing suggests demand might be starting to level off. The rising Yuan is clearly a concern for the PBoC who an...

Monday 31st May 2021It was an early start to month-end on Friday, with the US and UK off on holiday today. NAB’s Ray Attrill says there were a lot of intra-day currency moves late in the day on Friday, some of which will be down to asset managers managing their hedge ratios. There was little movement in other asset classes, even with a higher-than-expected inflation read, mainly because it wasn’t...

Friday 28th May 2021Three central bankers argued for a more rapid tightening of monetary policy overnight. The Bank of England’s Gertjan Vlieghe argued a scenario where rates in the UK could rise as early as Q2 next year, although NAB’s David de Garis says markets might have overreacted to what was a far more nuanced argument. The pound is the big winner in the major currencies overnight. The ECB’...

Thursday 27th May 2021The RBNZ surprised many yesterday by indicating that there could be an interest rate rise as soon as next year, which bolstered the Kiwi dollar and it hasn’t really come back down to earth. They are a little more guided in Europe, though, where the ECB mentions at every turn that tapering won’rt happen soon, let alone a rate rise. This morning Phil Dobbie asks NAB’s Rodrigo C...

Wednesday 26th May 2021Okay, we know The US dollar has fallen again, with rises in the Euro, and a shift up in the Yuan, but will it stick? NAB’s Ray Attrill says there have been conflicting reports from China as to whether the country would benefit from a stronger currency, or not, but the belief is it will continue to rise which could add more strength to the Aussie dollar over time. In the US h...

Tuesday 25th May 2021Equities are back on the rise and bond yields are falling, slightly, as investors seem to have accepted the line of most central banks that inflation is only transitory. The Bank of England’s Chief Economist is one of the few dissenters, but as NAB’s Gavi Friend points out, he has always been hawkish, and he is about to walk out the door anyway. Nonetheless, the inflation deba...

Monday 24th May 2021There was a strong set of numbers at the end of the week; PMI reads were generally good, UK retail bounced back and vaccines, we’re told, will do a good job against the current mutations of COVID-19. But the Euro lost ground on Friday as Cristine Lagarde refused to commit to any schedule for talking tapering, whilst support for tapering sooner rather than later is gathering som...

Friday 21st May 2021Equities bounced back in the US and Europe as markets re-evaluated the comments about the timing of tapering in this week's FOMC minutes. The US dollar is also lower, along with bond yields. NAB’s Gavin Friend points out that this is the third turnaround Thursday in a row. Will it become habit forming? On today’s podcast more discussion about differing attitudes to inflation, p...

Thursday 20th May 2021The FOMC minutes gave away more than expected, with the Fed suggesting it might be appropriate at some point to discuss a plan to adjust the pace of asset purchases, if the economic recovery continues. Lots of caveats there, but markets responding pushing 10 year Treasury yields up 5 basis points quickly afterwards. NAB’s David de Garis says the mere mention of tapering was e...

Wednesday 19th May 2021It’s been a mixed session for US equities overnight, whilst bonds headed sideways. The main move has been the further decline in the US dollar, falling below 90 on the DXY index for the first time since January and not far from the lows of 2018. NAB’s Gavin Friend says the move down is being driven by the reopening in Europe ,without the US labour market volatility, plus the...

Tuesday 18th May 2021US shares fell sharply today as investors once again weighed up inflation concerns. The only new data to support rising prices was the Empire State Manufacturing Index, which showed an all-time high for prices paid and future prices. NAB’s Tapas Strickland says it’s the tech sector that has been hit the hardest, perhaps because of overvaluation concerns and the fear of a Fed t...

Monday 17th May 2021Share markets are riding high again in the US despite a triple whammy of disappointing reports. First, retail sales ex-auto fell 0.8 percent in April, secondly consumer sentiment fell from 88.3 to 82.8, and finally inflation expectations have risen to the highest level in a decade. NAB’s Rodrigo Catril says investors are buying the Fed’s line that the recovery will see fluidity...

Friday 14th May 2021USA equities came bouncing back today after yesterday’s sharp response to the higher than anticipated CPI numbers. Topday, investors clearly decided to look beyond any temporary price rises and look to the great re-opening story. The news that there were less than expected jobless claims last week will have helped to drive the expectation that the worst is over and the US econo...

Thursday 13th May 2021US CPI numbers came in on the high side today, and markets have reacted swiftly, with equities falling sharply and the bond sell-off pushing Treasury yields up, although not quite as high as late March when inflation fears were at fever pitch. Phil Dobbie asks NAB’s David de Garis whether the market is over-reacting. After all, it’s one month, it includes the base effect of l...

Wednesday 12th May 2021Equities have taken a tumble again in the US, with the falls broader than just tech stocks. Europe too has seen sharp falls. This risk off mood is being driven by increasing inflation concerns, as evidence mounts that supply restraints are pushing up producer prices, which will eventually be passed on to the consumer. NAB’s Gavin Friend says vertigo is another factor, shares...

Tuesday 11th May 2021Inflation expectations continues to influence markets, with NAB’s Rodrigo Catril explaining why it has such a marked impact on tech stocks. Inflation in supply chains is a theme around the world, and tonight’s PPI numbers from China are expected to give another clear indication. The pound has had a string session as Britain prepares for more lockdown easing – and Boris Johnson...

Monday 10th May 2021US non-farm payrolls markedly undershot market expectations on Friday, with just 266 thousand new payrolls, versus the expectation of close to one million. NAB’s Tapas Strickland says some argue that the $300 a week jobless supplement is delaying the return to work. Nonetheless, investors took it as a sign that government stimulus would continue and that the Fed’s program would...

Friday 7th May 2021The Bank of England has upped its forecasts for the growth of the UK economy this year – from 5 percent a few months ago, up to 7.25 percent. The recovery is booming, it seems, but let’s not get carried away, said BoE Governor Andrew Bailey. NAB’s David de Garis looks at the implications of the new forecast on their policy decisions moving forward. The RBA has also been in the s...

Thursday 6th May 2021The Fed’s board continues to talk down the prospect of tapering, pushing the argument that price rises will be transitory. There was more evidence of prices being hit by supply chain issues in the services ISM numbers in the US this morning. It might be a different story in the UK. NAB’s Gavin Friend says its line ball as to whether the Bank of England will highlight the prosp...

Wednesday 5th May 2021Janet Yellen surprised the markets this morning suggesting that it might be necessary to raise interest rates to stop the economy from overheating. A call to be made by the Federal reserve, not the Treasury Secretary. Initial market reaction was paired back as the reading of the intent and timing of the comments was watered down. Meanwhile, shares fell in the UK and Europe, a...

Tuesday 4th May 2021Demand is outstripping supply on both sides of the Atlantic. That fact shone through in today’s US manufacturing ISM, which, whilst still well over 509, at 60.7 it is quite a bit down on March, with a rising number of backorders and increasing material costs. It’s a similar story in Europe, where manufacturing PMIs for April have been revised down a little. NAB’s Rodrigo Catril...

Monday 3rd May 2021What data there was on Friday was largely good news, apart from the horrific turn of events in India. In the US, though, reads on consumer sentiment and Chicago’s PMI came out stronger than expected. Yet markets turned a little sour at the end of the week, with equities sharply down, and commodity prices falling. NAB’s Tapas Strickland says month-end positioning will be partiall...

Friday 30th April 2021It’s been a choppy session for US stocks, even though the news on the economy was largely positive and earnings results have been strong. Still, equities generally pushed higher, with the S&P500 getting over the 42,000 level. Commodities have also been rising sharply, with copper breaking $10,000 momentarily. NAB’s David de Garis talks about how supply chain issues are pushin...