NAB Morning Call

Tuesday 17th November 2020Markets have been lifted higher on further vaccine news, with Moderna saying their trials have shown 94.5 percent effectiveness. NAB’s Rodrigo Catril says markets are pricing in the positive news that we could have vaccines distributed early next year, whilst ignoring the bad news of rising infection rates, particularly in the US. There’s also discussion on today’s podcas...

Monday 16th November 2020Last week was a volatile one, but markets enthusiasm stemming from the hope of a vaccine led the charge, with some shifting of focus on equity markets. That said, infection numbers continue to rise, particularly in the US, where the President has flatly stated there will be no lockdowns so long as he’s in charge. NAB’s Ray Attrill says the push-pull effect of vaccine news...

Friday 13th November 2020This week’s earlier optimism over a possible vaccine for COVID-19 has disappeared completely, with equities falling and bond prices rising. NAB’s Gavin Friend says rising COVID numbers in the UK and Europe have provided a dose of reality, with almost 33.5k cases in the UK on Thursday, despite a national lockdown. Numbers are also rising sharply in the US with the possibili...

Thursday 12th November 2020Even though the markets continue to respond positively to the hope of a vaccine, central bankers seem to be taking a more cautious tone. NAB’s David de Garis said the tone set by the ECB’s Christine Lagarde was one of concern, at their central banker’s conference. The RBNZ also continued to present a dovish outlook – despite New Zealand’s low infection rates – but the ex...

Wednesday 11th November 2020Those vaccine hopes continue today, even though there were warnings from Fed officials that the economy still faced ongoing impacts from COVID-19, with structural differences highlighting the need for the fiscal stimulus that now seems unlikely to happen this year. NAB’s Rodrigo Catril says there’s also some caution over the vaccine news, and a response to antitrust act...

Tuesday 10th November 2020The markets have scarcely had time to respond to the news that Joe Biden is the next President of the United States than we’re it with the (potentially bigger) news that Pfizer have successfully completed stage three of their COVID-19 vaccine trials, with an astonishing 90% success rate. NAB’s Ray Attrill talks through the market’s response, which includes rising equities...

Monday 9th November 2020There’s still a chance that in January the Democrats will take control of the Senate. Until then, President Trump is still in charge and the US faces rising COVID cases without a fiscal stimulus. Larry Kudlow suggested that Friday’s non-farm payrolls were so strong there isn’t a need for support but NAB’s Tapas Strickland says high-frequency data suggests the job recovery i...

Friday 6th November 2020Depending on which news source you choose, Biden has either 253 or 264 electoral college votes. We’re likely to find out today, but Donald Trump’s legal challenges could delay the confirmation of the result. Markets have adopted a risk-on stance, with the hope that there will be fiscal stimulus to counter the impacts of COVID, but other progressive policies, including tax r...

Thursday 5th November 2020US equities have climbed as the US goes through Wednesday without a clear winner in the election. It seems likely Biden will win, with five key states still undecided and millions of votes still to be counted. The Senate looks less clear and NAB’s Gavin Friend suggests this explains the behaviour of the bond markets, without the fear of unbridled fiscal spending. Converse...

Wednesday 4th November 2020The RBA announced cuts to interest rates and a step up in bond buying yesterday. NAB’s Tapas Strickland says, as other banks follow, there won’t be any influence in the strength of the Aussie dollar. Americans are voting right now, with record numbers of postal and early votes, which could delay the outcome, or speed it up. Although there’s a clear expectation than Biden...

Tuesday 3rd November 2020Markets flipped from Friday’s share and bond sell-off, with more optimism a day or two out from what is expected to be a Biden victory. NAB’s Ray Attrill also points to very strong manufacturing numbers published for the US, which will have been an encouraging sign for investors too. Ahead of the US election though, there’s a Melbourne Cup to be won, and a decision to be m...

Monday 2nd November 2020After the markets finished with a strong equities and bond sell-off on Friday, expect a busy week, with the RBA, the Fed and Bank of England all meeting, with the difficult job of determining how to see the economy through rising infection numbers. Then there’s the non-trivial matter of the US election tomorrow. Will we hear the results by Wednesday? NAB’s Rodrigo Catril sa...

Friday 30th October 2020Markets turned around again, with equities rising sharply. How much of it is the anticipation of Q3 tech company earnings results after the US close, how much of it is the strong bounce back in US GDP and how much is the anticipation of a clear outcome in next week’s US election? Phil Dobbie asks NAB’s Gavin Friend how he reads the market right now, and what are his thought...

Thursday 29th October 2020US equities have been hit hard today, the third day of losses, with the US dollar rising. NAB’s David de Garis said the markets hit the decks running as they opened in Europe, running away from risk. There’s growing concerns about the rising COVID infection rates, and, more significantly, rises in death rates in Europe and the US. Macron could be about to announce a signi...

Wednesday 28th October 2020There’s a risk that next week’s US election is more contestable than we might have considered a week ago. NAB’s Tapas Strickland says late surge polling could fall in the President’s favour. A poll in the US has also demonstrated just how many American’s would take to the streets if their preferred candidate didn’t win. Through rising COVID numbers into the mix, and it’s...

Tuesday 27th October 2020Markets are displaying classic risk-off moves today – with equities down, bond prices up and the US dollar the safe haven currency of choice. The reasons are clear – COVID cases continue to rise, a US stimulus won’t happen in a hurry and although the expectation of a Biden victory is clear there’s still the uncertainty of an election in a week’s time. NAB’s Rodrigo Catril...

Monday 26th October 2020Last week finished with US stocks down, the US dollar down and the price of bonds down. Normally, if the sentiment is risk off and equities are down, you’d see the US dollar rise. The fact that didn’t happen demonstrates the US dollar is in a down trend, says NAB’s Ray Attrill on today’s Morning Call. Short term we can expect markets to continue to be influenced by election...

Friday 23rd October 2020In a few hours Joe Biden and Donald Trump go head to head in the last election debate. NAB's Gavin Friend says equities have picked up some momentum later in the session, possibly not because of lingering hopes of a pre-election stimulus deal, but more on a Biden victory that could secure a more sizeable deal than would ever be agreeable to fiscally conservative Republicans...

Monday 22nd October 2020Talks are back on. Safter setting a deadline of Tuesday, Nancy Pelosi is continuing talks with the Republicans with a view to getting a stimulus package agreed for the US by the weekend. And after giving each other the cold shoulder for the first half of the week, the UK and EU are back to talking about a Brexit deal, meeting every day now until the issue is resolved. “This...

Wednesday 21st October 2020Equities are higher in the US again today. NAB’s Tapas Strickland says it is largely on the back of continued hope that a stimulus deal will be struck. If not now, perhaps after the election with the possibility that the Democrats also win control of the senate. There’s also optimism around a vaccine and US housing data bounced back, showing more underlying strength in t...

Tuesday 20th October 2020Markets are waiting to see the outcome of two on again off again decisions, both with sizeable economic consequences. Boris Johnson declared that Brexit talks were over, but NAB’s Ray Attrill says the markets clearly don’t believe him, with the pound one of the strongest currencies today. Stateside, equities are subdued as the deadline for a pre-election stimulus deal draw...

Monday 19th October 2020After a fairly volatile week markets were calmer on Friday on the back of positive retail numbers from the US. NAB’s Rodrigo Catril says Republicans could use it as an excuse not to support further stimulus measures. There was little market reaction to Boris Johnson’s threats to walk away from Brexit negotiations, perhaps because ‘walking away’ has been shown to mean ‘keep...

Friday 16th October 2020There’s a strong risk off mood in the air, which has pushed the US dollar higher and hit stocks. Phil Dobbie asks NAB’s Gavin Friend whether markets are now accepting that COVID-19 cases are rising and that will stall attempts at an economic recovery. It certainly seems to be the case in Europe, with more stringent controls being introduced in Paris and London and cases ris...

Thursday 15th October 2020Philip Lowe, the Governor of the RBA, is talking this morning. NAB’s David de Garis tells us what to expect in terms of signalling for future stimulus measures. Stimulus is off the cards for now in the US, but listening to President Trump speaking at the Economic Society of new York you’d have to wonder why they need it. They’ve had the smallest economic contraction and f...

Wednesday 14th October 2020The Aussie dollar has taken a hit twice in the last twenty-four hours. NAB’s Rodrigo Catril says the first hit came on reports that China was to stop importing Australian coal, a significant worsening of trade relations. The second hit came as the US dollar rose and equities fell as the last vestiges of hope for a stimulus deal seemed to disappear. There’s also caution a...