NAB Morning Call

Tuesday 8th September 2020A drop in the pound was the only significant market move today, driven by threats from Boris Johnson to walk away in mid-October if he doesn’t get the Brexit deal he wants. Normally such remarks are taken as brinkmanship as negotiations near the finish line, but today there was a market reaction – perhaps because there’s little else to go on. Data from Australia today wil...

Monday 7th September 2020US jobs data on Friday helped the equities market to regain a little composure as it fell for the second day. It also saw Treasury yields rise sharply, steepening the curve. NAB’s Rodrigo Catril proffers his opinion on how much of this is a short-term response and how much the start of a longer-term shift. The Fed’s Jerome Powell said on Friday that the recovery ”will get...

Friday 4th September 2020There have been massive falls in US equities, particularly tech stocks. NAB’s David de Garis says thin trading in summer can always create sharper moves, but there’s little doubt a correction was overdue and tech stocks have borne the brunt of it. There’s been no encouraging news to divert attention – the Services ISM number came in lower than expected, with the employment...

Thursday 3rd September 2020The US dollar managed a slight recovery in the overnight session, which has also seen continued growth in US equities, echoed across the Atlantic. On today’s podcast Phil Dobbie asks NAB’s Ray Attrill why the positive sentiment when the data we’re seeing isn’t so positive? ADP employment numbers were softer than expected and the Fed’s Beige Book suggested the recovery in...

Wednesday 2nd September 2020Deflation in Europe comes as no surprise, just as the shift in the Fed’s monetary policy seems likeold news, but NAB’s Gavin Friend explains how the markets are still adjusting to it. Data releases have largely been positive, with a higher than expected increase in the USA ISM, and the Caixin PMI for China is at its highest level since 2011. So, what can we expect from...

Tuesday 1st September 2020The Australian and NZ dollars reached two-year highs in the overnight session, with the US dollar declining further. Phil Dobbie asks NAB’s Rodrigo Catril whether the trend will continue, wand whether we could see the Aussie reach 80 US cents late next year. There’s also discussion on Warren Buffet’s investments in Japan, Richard Clarida’s explanation on the Fed’s policy...

Monday 31st August 2020NAB’s Ray Attrill says the US dollar bore the brunt of Friday’s reflective thinking on Jerome Powell’s Jackson Hole speech. He says, if the market believes the Fed will run inflation up to 3%, then real US interest rates would be lower and higher inflation should force the currency down over time, hence the response. But isn’t this somewhat hypothetical when inflation has st...

Friday 28th August 2020Jerome Powell used his virtual address to the Jackson Hole Symposium to announcer the Fed’s strategy of targeting an ‘average’ 2% inflation rate, a subtle change that is likely to keep interest rates lower for longer. NAB’s David de Garis says that lower rates will help to propel investment once confidence returns, but it’ll take a while to eat into the current spare capacit...

Thursday 27th August 2020There’s continued optimism in the markets, with equities reaching new highs again, helped on by better than expected durable goods orders in the US, and despite rising US-China tensions and the potential impact of Hurricane Laura. NAB’s Rodrigo Catril also discusses the continued interest in Australian bonds and the impact on GDP of yesterday’s construction numbers and tod...

Wednesday 26th August 2020The US dollar is down again this morning, with equities up and touching new highs again. More significantly, we’ve seen sizeable increase in government bond yields in the US and Europe. NASB’s David de Garis talks through the factors at play, including hope that the US China trade relationship will continue as planned in the phase one deal, and concerns that a bigger supp...

Tuesday 25th August 2020US equities reached new highs again, with big gains also in Europe. NAB’s Rodrigo Catril says investors are back to reacting to the vaccine hopes, with President Trump announcing he will fast track roll-outs in the US – faster than a ‘traditional’ administration. Meanwhile, NZ’s retail numbers yesterday fell significantly during Q2 as expected – so will they pay the price f...

Monday 24th August 2020Europe’s PMI’s disappointed markets on Friday, whereas the US numbers were better than expected, helping to lift equities to new highs (again). The UK provided mixed news, with string PMIs offset by a week of Brexit negotiations that led nowhere. Donald Trump is pushing out all the stops on a virus and cure for COVID-19, with announcements expected today on one, if not both....

Friday 21st August 2020US equities continue to rise, even though the jobless claims numbers rose last week. Phil Dobbie asks NAB’s Gavin Friend, at what point will they appear to be overvalued? There’s also discussion on bond movements, the continued fall in the Kiwi dollar, even against a weaker US dollar today, and the rise in the pound. There’s lots of PMIs released today – services and manufac...

Thursday 20th August 2020There’s no doubt about it, there was disappointment from investors after the minutes of the recent FOMC meeting were released. There was hope that there would be some indication of how the committee would be arriving at a forward guidance for Fed strategy, but nothing. As NAB’s David de Garis says, Jerome Powell had suggested that their strategic review – that was interrup...

Wednesday 19th August 2020US stocks continue to rise to record highs, helped today by strong housing starts and building permits. Phil Dobbie asks NAB’s Tapas Strickland whether there’s too much optimism about the rate of recovery and that’s showing in overvalued assets, including stocks and gold. Maybe the FOMC minutes will bring us down to earth tomorrow morning, although the news that Nancy Pel...

Tuesday 18th August 2020The US dollar continues to fall, pushing the Aussie dollar higher this morning. The dovish tone set by the RBNZ – plus a delayed election – means the NZ dollar hasn’t seen the same level of growth. In fact, NAB’s Ray Attrill points out in today’s Morning Call, the Aussie-NZ dollar cross is at a two year high. That’s not all, US equities are hitting new levels too, even thou...

Monday 17th August 2020Lockdowns have been extended in Victoria and Auckland, even as COVID-19 cases ease. But, NAB’s Rodrigo Catril, says hotspots around the world are becoming a bigger concern, hence the continued uncertainty in markets – although equities continue to perform close to record highs. With so much focus on the virus it’s not surprising that US China trade talks have been called off...

Friday 14th August 2020Jobs data is confusing right now. How much is it influenced by government stimulus activity? Well, not much in the US right now because an agreement still hasn’t been reached, but weekly new claims are below a million for the first time since March. In Australia unemployment has risen to 7.5%, before the Melbourne lockdown. NAB’s Gavin Friend talks through the data, and the...