NAB Morning Call

Friday 28th February 2025Please note this communication is not a research report and has not been prepared by NAB Research analysts. Read the full disclaimer here.The consequences of President Trump’s policies are being felt far and wide. The US now has a transactional based approach, even with its allies on areas such as defence which were considered shared values. So, what are the repercussions for Australia? Phil talks to Dr John Kunkel, senor economics adviser at the United States Studies Centre at the University of Sydney.   He suggests that, whilst some of the approaches are questionable, Australia should continue to  engage and, more than most, is well placed to take advantage of US growth. And if Australia has to spend more, for example, on defence, it is simply a reflection on how ill-prepared we have been in the past.

Friday 28th February 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABPresident Trump has made some more sharp moves on tariffs. The date for Mexico and Canada is now back to the middle of next week, and a further 10 percent is to be imposed on China at the same time. Phil asks NAB’s Gavin Friend about the market reaction and how much of this will actually come to fruition. UK Prime Minister Keir Starmer has been to the White House, but it seems Ukraine was off the agenda ahead of a ‘big deal’ supposedly being signed with Zelenskyy tomorrow. There’s also discussion on US PCE numbers and Australian capex. All very interesting, but clearly the focus is on which tariffs happen where and when (and by how much).

Thursday 27th February 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABPresident Trump has his first cabinet meeting and announced delays on the introduction of tariffs for Mexico and Canada (now April 2nd) and revealed how much Europe will be paying (25%) although he was a bit nonspecific on some of the detail. Nab’S Ray Attrill says the US Houe of Reps has also passed the budget, which includes big spending cuts, but tax cuts see the deficit expanding. It did impact bond yields a little, but there’s not been much market reaction to the latest tariff talk. Locally, CPI came in a little weaker than expected, helped by a continued fall in housing costs which could help bring down the next quarterly CPI result and keep the RVBA on track for a May cut

Wednesday 26th February 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThis morning the Aussie dollar is down whilst safe haven currencies have risen, as markets start to assess the risk of US tariffs. A lot of f the moves in the last 24 hours relate to Trump’s comments that Canada and Mexico are due to see their 25% import from 3rd March. Steel tariffs are then scheduled to follow on the 22nd, then broader reciprocal tariffs from April. NAB’s Tapas Strickland says Alcoa’s CEO has warned that 100kUS industry jobs could be at risk from tariffs on steel and aluminium. So, again, the question remains, is it bravado, given China’s 10% is the only tariff imposed so far?Australia’s monthly CPI is out today, although it has a heavy goods bias, so the read won’t be particularly accurate. This time tomorrow (after the US close) NVIDIA reports their earnings results.

Tuesday 25th February 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThere’s a bit of buying the dip, says Sally Auld, NAB’s Chief Economist in waiting, on today’s podcast. The S&P tested 6,000 before rising sharply back and finishing well up on the day. Markets seem to be largely ignoring a spate of softer data, to which we can add the latest Dallas Fed Manufacturing Survey, which showed a sharp rise in business uncertainty.Germany’s Chancellor in waiting, Fredriech Merz has indicated he wants to move quickly to increase Germany’s defence spending, ahead of the new government, as Europe continues to scramble to forge its own path in the future for Ukraine, and the region’s defence strategy.New Zealand provides the best news of the week so far. Retail sales are well up, signalling that the economy could be on the road to recovery. Whilst there’s corporate earnings this week, and a sprinkling of data today, the focus will be on peace talks, with Macron in Washington right now to give the European perspective and avoid a deal that’s too favourable for Russia.

Monday 24th February 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABFriedrich Merz is likely to be the new Chancellor in Germany, but the exit polls show his CDU/CSU alliance will need to negotiate with other parties to form government and stave off the influence of the far right AfD. NAB’s Rodrigo says that could take some time. Meanwhile, a string of less optimistic data releases for the US. Friday’s Services PMI was a big downside surprise, falling into contractionary territory. The Michigan consumer sentiment survey also recorded a big fall, whilst there was a uptick in inflation expectations. And there’s a move down in US shares. Rodrigo wonders whether this could all encourage Present Trump to move faster on tariffs. 

Friday 21st February 2025Please note this communication is not a research report and has not been prepared by NAB Research analysts. Read the full disclaimer here.Germans will head to the polls on Friday. It seems highly likely that the centre-right CDU/CSU will gather the most votes, but over the last few months the right win populist AfD have been closing the gap. Dr Simon Toubeau, Associate Professor of Politics and International Relations at Nottingham University says it’ll be the CDU picking coalition partners in the centre and on the left, with the AfD left out in the cold. But how long will it take to arrive at a new workable government at a time when Europe is in discussions about increasing defence spending to protect Ukraine? How can Germany spend more on defence without undoing it’s self-inflicted debt-break? And where will the government stand on the idea of Eurobonds?  

Friday 20th February 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABIt’s not all good news from the US. Although Walmart reported strong profit growth yesterday the outlook is less certain, and there are indicators that their customer base is a section of US society that is suffering. The dollar is weaker today and shares, generally are lower. Nonetheless, NAB’s Rodrigo Catril says support for President Trump remains strong and markets did respond to a comment that a new deal with China was “possible”.Locally, there were no surprises in the latest Australian employment data yesterday. Unemployment did tick higher, but job numbers also increased, some of which can be explained by seasonality factors.  He senses Michelle Bullock’s appearance at the House of Representatives Standing Committee on Economics could be a little politically charged, as the next election nears. And politics dominates the agenda in Europe, with Germany’s federal election on Sunday. How this could influence Europe’s plans for a more unified approach to defence and energy is a key question, looked at in the Weekend Edition out later.

Thursday 20th February 2025NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABMarkets reacted strongly to comments from the ECB’s Isabel Schnabel who questioned whether they have already gone as far as they need to. She wonders whether the policy rate is restrictive anymore. NAB’s Skye Masters talks about the market reaction to that, and other central bank news over the last 24 hours. The FOMC minutes suggest slower moves by the Fed, rhe RBNZ seem set to reduce the size of cuts from hereon in, and UK inflation ticked higher than expected, which won’t see the BoE moving any faster. Today the RBA (and markets) will be focused on Australia’s unemployment rate. Skye said expectations are within a very tight range,from4 to 4.1%, so anything outside that could prompt a reaction.