NAB Morning Call

Tuesday 27th August 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThere hasn’t been a lot of market movement overnight. What there was saw a slight reversal on positions taken after Powell’s talk at Jackson Hole. Hence, the dollar is back up a little, shares have fallen, and bond yields are up slightly too. It’s lighter trading, of course, at the height of the northern summer and only second tier data to keep us occupied. That’s why NVIDIA’s earnings results on Wednesday (US time) could have an outsized influence on shares. Oil is sharply higher today, because of Libyan politics rather than tensions between Hezbollah and israel. NAB’s Ray Attrill joins Phil to discuss the day’s market news.

Monday 26th August 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABEven though Fed speakers positioned markets to expect gradual and methodical cuts late last week, it was a very different language used by Jerome Powell at Jackson Hole on Friday. NAB’s Tapas Strickland joins Phil to discuss what was said and how market reacted. It’s clear a September cut is coming, with the Fed chair declaring that “the time has come for policy to adjust”, with a focus more on easing in the jobs market than the fears of a reprise in inflation. They also look ahead to a fairly busy week for data, including CPI and retail sales in Australia. 

Friday 16th August 2024Please note this communication is not a research report and has not been prepared by NAB Research analysts. Read the full disclaimer here.On the face of it you’d wonder why central banks in New Zealand and Australia have taken such different paths when it comes to fighting inflation. They are both western economies that were growing reasonably well before the pandemic. Their response in 2020 was similar, with massive fiscal injections and quite severe lockdowns. So, why such a radical difference in the response to inflation post-pandemic? The RBNZ is rapidly cutting rates, whilst the RBA is unlikely to start until next year. Stephen Toplis, Head of research at BNZ Markets in Wellington, says the economies are not the same. Even before the pandemic New Zealand was suffering with labour shortages, pushing wages higher. Now the economy has seen a more significant slowing, in part due to their higher level of rates. As Gareth Spence points out, NAB’s Head of Australian Economics, there is certainly an adjustment going on in Australia, but overall the economy and labour market have been resilient.

Friday 23rd August 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABBond yields are higher, the dollar has fallen and US equities are lower. Markets have switched direction over the last 24 hours. NAB’s Ray Attrill says there are three reasons for the reversal – the latest PMI data, central bank speak and expectations for the outcome of the US election. The rhetoric from Fed speakers has been around a more gradual approach to rate cuts.  It’s also the start of the Jackson Hole Symposium. It’s just like the Oscars for central bankers, without the awards, the glamour or the popular appeal. But, for all the speeches and panel discussions, will anything be said that’s not already known or assumed?

Thursday 22nd August 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABToday as the US dollar weakens again, against a rising Yen, Phil asks JBWere’s Sally Auld to explain the impact rates differentials are having on the Japanese carry trade. The FOMC minutes this morning came as close as they possibly could to saying a rate cut will happen in September. That’s added to the weakness in the US dollar, and helped equities recover.  They also look at the price of oil, which Sally says is reaching a point where it represents better value for investors. Global PMIs are the focus, along with th weekly jobless claims. A downward revision to the non-farm payrolls overnight was quite marked, but Sally explains why markets didn’t react toit as much as you might expect.

Wednesday 21st August 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABIt’s been another quiet session, with stocks taking a breather after an 8-day rally, with volumes for the S&P 25% below its 20-day average. Bond yields have pushed lower, which NAB’s Ken Crompton says is largely a response to Canada’s CPI numbers, which presented the evidence needed for the Bank of Canada to continue with its rate cuts. The US dollar ticked lower again, thanks to a sharp rise in the Yen, which was a response to a Bank of Japan report suggesting inflation was rising from wage pressures and corporate behaviour (presumably, claiming bigger margins). That seems to have been taken as the case for further rate hikes by the bank, and Friday’s inflation number might seal the deal. 

Tuesday 20th August 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABWe are in the thick of the US and European holiday season, mixed with a dearth of data. Hence, shares are pushing higher, presumably on the hope of greater reassurance around rate cuts from the Fed at Jackson Hole. NAB’s Gavin Friend says markets wouldn’t react well if there isn’t some indication that September cuts are on the cards. Meanwhile the US dollar drifts lower, oil takes a hit and bonds remain fairly flat.   Today Canada’s CPI is the main data point, whilst we’ll be looking for any additional colour in the latest minutes from the RBA.

Monday 19th August 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABCentral bankers get together for the glitzy proceedings of the Jackson Hole Symposium this week. Will Jerome Powell use it s a springboard for more advice on how and when the Fed will cut rates? Probably not, says NAB’s Rodrigo Catril, given the focus on data in Fed decision making and there’s much that’s new in the intervening days. Still, markets are optimistic, evidenced by seven days of consecutive growth in the S&P share index up to Friday. The Riksbank could announce a supersized cut this week and a softer Canadian CPI print could see the Bank of Canada heading the same way. 

Friday 16th August 2024Please note this communication is not a research report and has not been prepared by NAB Research analysts. Read the full disclaimer here.A report last week from S&P Global highlights that the debt held by Australian states could exceed $600 billion later this year. Rebecca Hrvatin joins Phil to discuss this rise in debt and what it’s doing to credit ratings. Overspend on infrastructure projects seem to be one of the major concerns.But there’s no shortage of buyers according to Ken Crompton. Ken is senior fixed income strategist at NAB and a regular on The Morning Call. He says, ironically, greater debt will be attractive to overseas investors who might previously have been put off by the limited availability of Australian state debt.The issue going forward is not how much debt is being carried, but how effectively it’s being managed. Massive project overspends are part of the problem and interest payments are becoming an increasing proportion of state governments’ expenditure.Phil asks whether green bonds could restore some balance and attract even more foreign buyers.