NAB Morning Call

Monday 13th May 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThere were a few signs that inflation globally might be taking longer to fall. Canada’s surprise employment numbers pushed yields higher, and the UKs CPI was an upside surprise on Friday as well. Consumer inflation expectations in the US also came in higher. NAB’s Tapas Strickland says al these factors could push back rate cuts a little further. And what about locally? What is the potential impact of more government spending and wage increases in the budget tomorrow? Meanwhile, demand is more of an issue for China than inflation. Aggregate financing fell for the first time in 20 years and Joe Biden is expected to announce a 100% tariff on Chinese EV imports this week.

Friday 10th May 2024Please note this communication is not a research report and has not been prepared by NAB Research analysts. Read the full disclaimer here.Productivity gains have been slipping, not just in Australia, but around the world. The problem locally is accentuated by the shift away from a heavily automated resources sector, where significant value is added per employee. If we can’t manage the same level of efficiency as we switch to more labour-intensive output, particularly in the services sector, should we assume that productivity growth will not return to pre-pandemic levels. It’s a question Phil puts to Danielle Wood, chair of the Productivity Commission. They discuss what is being done to fix Australia’s productivity shortfall and what can we learn from countries where productivity is higher.

Friday 10th May 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThere wasn’t much market reaction as the Bank of England kept rates on hold but said what many already knew, that they will have to cut rates in the coming months. The ECB seems wedded to the idea of a June cut, with the accounts of their last meeting out today, but there is some speculation about how quickly they will follow through. Canada’s unemployment is expected to tick higher, adding pressure for a rate cut there although, as NAB’s Rodrigo Catril points out, it’s wage inflation that really counts. The UK is expected to see GDP return to positive territory today, and China’s PPI and CPI numbers are out over the weekend. 

Thursday 9th May 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThere wasn’t any tier one data overnight to give markets any clear direction. You could say there was an air of subduedness. The Riksbank cut rates, as suggested yesterday, but one ECB member is concerned that going too early, against a Fed that keeps rates on hold longer, could drive the Euro lower and add to inflation concerns. NAB’s Gavin Friend says the problem emerges after one or two cuts, alongside a Fed that’s not moving. So what’s the Bank of England’s strategy? August seems the most likely month for a cut, says Gavin, but we’ll find out more at the meeting and the press conference that follows.

Wednesday 8th May 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABNAB is still expecting that the RBA’s next move will be a cut in November, because yesterday’s meeting did raise the possibility of a rate hike if inflation remains too persistent. NAB’s Skye Masters says the market reaction was tame because none of this came as a surprise. We’ve known that inflation was taking time to come down, and the revisions to the RBA’s inflation forecasts yesterday simply reaffirmed that belief. Neel Kashkari from the Minneapolis Fed also spoke of the possibility of a hike if inflation and jobs remained strong. In Europe it’s a different story and there’s a real possibility that the Riksbank will cut rates today.

Tuesday 7th May 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThe RBA meets today and is expected to keep rates on hold. They also release their revised inflation forecasts in the latest Statement of Monetary Policy. NAB’s Taylor Nugent says there will be some market sensitivity around these numbers, as well as the press conference, although there’s a firm expectation that rates won’t budge today. There is one central bank that might cut rates this week though. Listen in for more on that, plus the hopes of a peace deal in the Middle East and a sprinkling of second tier Euro data.

Monday 6th May 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThe non-farm payrolls in the US came in lower than expected, with a rise in the unemployment rate. NAAB’s Ken Crompton says we shouldn’t get too excited by the unemployment rate because it’s a small move when you take it to the second decimal place. The Services ISM was also weaker, falling into contraction territory. The impact has been to bring forward rate cut expectations a little, with a 75% chance the Fed will move in September. In Australia home loans data wasn’t particularly encouraging reading. The focus is now on the RBA tomorrow, then state budges later in the week. Will spending add to pressure on jobs, slowing the fall in inflation?

Friday 3rd May 2024Please note this communication is not a research report and has not been prepared by NAB Research analysts. Read the full disclaimer here.They dominated the global share market last year and many have enjoyed tremendous growth so far this year, with NVIDIA as the clear outperformer. Whilst there’s a been a bit of an adjustment lately, Katie Stockton, founder of Fairlead Strategies in Connecticut, says there’s still plenty of momentum and their own analysis points to prices pushing higher. Katie’s approach is to build a portfolio based on technicals. “I do read macro strategists work”, she says in this weekend’s podcast, ”but it won’t drive our decision making process”. In other words, any macro development will be reflected in the indicators they follow at some point. And those technicals are painting a positive picture for most of the big tech stocks right now. 

Friday 3rd May 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABUS productivity has slipped quite markedly in Q1, that’s pushed up labour costs – is that something to worry about? Phil puts the question to NAB’s Gavin Friend, who says markets are still responding to yesterday’s dovish slant from the Fed. Non-farm payrolls will be watched keenly tonight, along with US Services PMI. Locally  Australia’s home loans data is out today. Phil and Gavin also talk through revisions to the OECD’s growth forecasts for the US, Australia, Europe and the UK.