NAB Morning Call

Thursday 22nd May 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThere was another weak bond auction in the US overnight, pushing yields ever higher. NAB’s Tapas Strickland says there is a risk premium being applied to US bonds, from concerns over tariffs and, perhaps more significantly, rising government debt. The Big Beautiful Bill could add significantly to the government’s debt at a time when the balance of trade is deteriorating. Phil asks, should we be worried? Also today, a bigger than expected increase in UK CPI, but how much of it is down to one-off impacts? Today, the New Zealand Budget and US and European PMIs give a suggestion of which economies are taking the biggest hit from Trump’s tariffs.

Wednesday 21st May 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABBond yields fell significantly in Australia yesterday after the RBA’s rate cut. NAB’s Sally Auld says markets were divided as to what the central bank would do - some even thought they would keep rates on hold. NAB made the call for a 50bp cut, whereas ultimately it was just 25bp, but Sally says she feels somewhat vindicated because the board did discuss a larger move down.   Phil asks whether by the year end we could see a situation where the RBA has moved markedly lower, whilst the Fed, faced with persistence inflation, has to keep rates higher. Alongside Aussie bond yields, Japanese yields were the other big mover, although their yields were moving higher after a disappointing 20-year auction. It’s also a session that’s seen an end to the rally in US stocks. The S&P didn’t quite make it to a bull run. UK inflation will rise today, but mainly because April was a nasty month for bill shock from utility companies.

Tuesday 20th May 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABFairly tepid moves across equities, bonds and currencies today with very little data and not much in the way of big announcements. The Deal of the Day probably goes to the UK and EU, who have agreed to less in the way of checks and bureaucracy for British food exports, in exchange for prolonged access to UK fishing waters. It also facilitates European spending with the UK Defence sector, something that might be important as nothing concrete came out the Trump-Putin phone call today.  The RBA is expected to cut between 25bp (market consensus) and 50bp (NAB’s call), whilst Fed speakers are increasingly downplaying the idea of any cuts in the US before September at the earliest. NAB’s Taylor Nugent joins Phil to talk through the day’s moves and news.

Monday 19th May 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThere’s a lot of talk going on right now and President Trump is at the centre of most of it. Phil talks to NAB’s Ray Attrill about a plethora of negotiations that could influence markets this week. First, the Trump call to Putin, followed by a call to Zelensky. Can he break the deadlock? There are also negotiations going on with the EU. Documents have reportedly changed hands, and JD Vance met with Ursula von der Leyen and Italian Prime Minister Giorgia Meloni on Sunday. It might  be in the nick of time, because Treasury Secretary Scott Bessent said on Sunday that tariff levels will go back to April 2nd levels to those countries that haven’t negotiated with the US in good faith. And in the US, where Republicans have voted against the Big Beautiful Tax Bill, the spending committee is meeting now to plan a way through the standoff. On Friday markets reacted to the cut to Moody’s US credit ratings, although Ray says it’s really of little consequence. And locally, the focus is on the RBA tomorrow, and just how big a cut will they make?

Friday 16th May 2025Please note this communication is not a research report and has not been prepared by NAB Research analysts. Read the full disclaimer here.It’s been a frantic week of deal making by the US President. Was this always part of the plan? To create a destabilising set of circumstances that whets the appetite for deals with the US? Phil asks Michael Feller whether that was the plan all along and, if so, are we over the worst of uncertainty, and should investors be planning for a renewed emphasis on global growth? Michael is chief strategist at Geopolitical Strategy in Sydney, who advise firms about navigating environments just like this. He’s a former finance journalist, investment strategist and spent many years in government, as a diplomat in Singapore, as senior adviser to Malcolm Turnbull, and director of the Department of Foreigner Affairs and Trade.Phil asks him, how should investors position themselves in a world dominated with tariff talk, but also riddled with geopolitical unrest, from Israel and Iran to Russia and Ukraine, and this last week, India and Pakistan? And should we prepare for a more multipolar world? That’s something that was emerging, says Michael, well before Trump returned to the White House. 

Friday 16th May 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABSofter retail sales and slower growth in produce prices has upped expectations for the speed of Fed cuts this year, pushing bond yields lower today. It’s been a curious session, with NAB’s Ray Attrill saying equities, bonds and the dollar seem to be acting independent of each other. Oil is also forging its own path, driven down by expectations that President Trump will forge a deal with Iran which could see them adding to the global supply pool sometime soon. They also discuss yesterday’s Australian employment numbers and why we might have been bit optimistic to expect a 50bp cut by the RBA next week. But never say never.

Thursday 15th May 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABEquity markets were a little more restrained today, perhaps because there were no big announcements to drive the enthusiasm. Tech is the exception, that continues to move up. And deals with Japan and South Kores are close, apparently.  NAB’s Tapas Strickland says the lowering of tariffs on China has already had an impact, with container ship bookings rising sharply this week. Data out later will show us the impact the cuts had on retail sales and producer pries in the US in April. The US President is still in the Middle East, and will perhaps move to Turkey later today if Putin indicates he will show up for negotiations with Zelensky. But don’t count on it. There’s also an increasing focus on the Beautiful Bill - what form will it eventually take. The Wall Street Journal has described it as a Turkish Bazaar of ideas and there are concerns that it could add to debt without assisting with growth.

Wednesday 14th May 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThere’s no denying, President Trump and his team are out to do deals and, right now, markets seem to be loving in. NAB’s Skye Masters talks through today’s market action, which has seen a significant rise in tech stocks, helped by news that restraints on the sale of NVIDIA stocks could be lifted for the UAE. The other big announcement during the President’s visit to the Middle East is a $142bndefence deal with Saudi Arabia. With all this positive sentiment, it seems investors that were underweight on US equities are quickly buying  back in to the market. The S&P is now higher than it was at the start of the year. And, as Phil discusses with Skye, the data we’ve seen over the last 24 hours – US CPI, the NFIB small business survey, NAB’s Australian Business Survey and Westpac’s consumer confidence, all came in a little better than expected. Today, aide from the next bit of Trump news, |ussie wages data is released. It’s unlikely it’ll do anything to stop a cut by the RBA next week.

Tuesday 13th May 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABMarkets were taken aback by the size and immediacy of tariff cuts announced Monday between China and the US. Although we did highlight it as a possibility in yesterday’s podcast. NAB’s Gavin Friend says it wasn’t just the size of the tariff cuts, down to 30% on China and 10% on the US, but also the goodwill displayed after the weekend talks. Equities have risen sharply, the dollar is stronger, and markets are pricing in more rate cuts.  The news does make upcoming data a little less relevant. We get the US inflation print today - if its higher the US administration can say the lower tariffs should fix that. Just as the UK government can respond to higher unemployment -  if it happens today -by saying they have just proposed sweeping changes to immigration rules. That’s politics. And there’s a lot of it lately.GOT A QUESTION FOR NAB’S CEO? Phil will be talking to Andrew Irvine on the Weekend Edition, a week on Friday. Ask what you like about finance and the economy, globally or locally. Orif you  want your voice heard, ask your question out loud and send in a sound file to be played on the podcast. Whichever way you want to do it, email morningcall@nab.com.au - don’t forget to include your name and where you are from.