NAB Morning Call

Friday 6th July 2024Please note this communication is not a research report and has not been prepared by NAB Research analysts. Read the full disclaimer here.In June, according to PropTrack, Australia’s home prices hit new highs, rising for the 18th consecutive month. But, as Eleanor Creagh, senior economist at PropTrack explains, the growth is far from even. There are some cities where prices are falling. So, what are the factors driving prices up? And how can it be that prices have risen so much in the last year even though the RBA is pursuing such a hefty tightening cycle, pushing interest rates higher.Eleanor takes Phil through the latest PropTrack data and looks at the inevitable question, where to from here? If buyers have taken a longer-term view, buying when interest rates have peaked, does that mean we are less likely to see a spike in prices when the rates start to fall? Or not? Logic and house prices can be strange bedfellows.

Friday 5th July 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThere are three big political stories today. First, the French election round two could still deliver a majority for Marine LePen’s party. But NAB’s Gavin Friend says markets are not viewing that as such an alarming outcome, saying there’s been a bit of a learning curve about what this new party could do. The UK is likely to face a change of government today, which could bring new optimism to a country that is clearly ready for a change. And, as Gavin observes, the challenge to Biden’s Democrat leadership hasn’t gone away yet. Data wise, today’s key number is the US non-farm payrolls. The numbers to watch are the employment rate and average hourly wages. 

Thursday 4th July 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThe S&P hit new highs as bond yields fell overnight. Markets clearly thought the latest ISM Services number, which came in surprisingly weak, is just the sort of slowdown indicator that will encourage the Fed to act sooner rather than later. JBWere’s Sally Auld talks through the numbers, the market reaction, and the diverse attitudes of Fed members displayed in the latest FOMC minutes. There’s also discussion on yesterday’s Australia retail sales, that came in a little stronger than the RBA might like, but it’s just one month and there are a lot of seasonal factors at play. Prepare for a quiet day today, with the US on holiday. But keep an eye out for the Bidden story. Could pressure be mounting for him to step out of the race, for someone younger who is able to finish sentences.

Tuesday 2nd July 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABTreasury yields continue to rise. NAB’s Syke Masters says here are a range of factors at play ,but one is the seeming lack of concern on both sides of politics to address the US government’s rising deficit. In Europe concerns about a National Rally majority eased as almost 170 candidates withdrew from the second round election to avoid diluting opposition. A higher-than-expected index in the Tanken Large Manufacturing index in Japan provides another reason for the BoJ to lift interest rates. And the RBAA minutes will be scanned for suggestions about how seriously the potential of a rate hike was/is.

Monday 1st July 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABIt’s the first day of the third quarter. The unsurprising news from French exit-polls this morning shows a clear win for Le Pen’s National Rally party, securing a third of the votes. NAB’s Taylor Nugent says markets have already priced-in the outcome and there’s been very little movement in early trade. Markets responded a little more to Biden’s shaky debate performance on Friday. On the data front, the Core PCE Deflator, the fed’s preferred inflation gauge, was good news – a little better than expected if you look at the second decimal place! Germany’s CPI is out today and the Central Banking get-together kicks off in Portugal. 

Friday 28th June 2024Please note this communication is not a research report and has not been prepared by NAB Research analysts. Read the full disclaimer here.Could central banks push their timing back even further? Emma Lawson says we can’t ignore how economies are slowing, so there’s every chance that market pricing for cuts could move forward. It’s never a straight line, the fixed income strategist at Janus Henderson says.Does that mean we have to put aside the hope of a soft landing, anywhere in the world? Emma suggests we haven’t seen the cumulative impact of the tightening of policy yet because it takes time to filter through. But what about government spending, in Australia, the US and Europe?  Does it help or hinder the fight against inflation, and does it provide opportunities for investors.Emma give her take on the macro picture and the philosophy behind Janus Henderson’s approach to investing, and talks about Australia’s opportunity for investors – a mix of stability and instability and knowing what to do with it. Also, if the slow decline in central bank rates is one of the surprises of 2024, what does Emma think will be the next surprise that most people aren’t seeing?

Friday 28th June 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABThere wasn’t a lot of data of significance around overnight, but the combination of a range of weak data prints fuelled some hope that the fed will cut sooner than markets had been moved towards. NAB’s Ray Attrill says a slight overnight rally on Australian bonds was likely to be a response to what the RBA’s Andrew Hauser has been saying, suggesting a partial CPI print for one month was hardly enough to base rate expectations on, and there’s a lot more data before the August meeting. The key number today is the US Core PC deflator, the Fed’s preferred measure of inflation. Markets will be very sensitive to this number, with Ray suggesting its important to look to the second decimal place because, on an annual basis, that can make all the difference.

Thursday 27th June 2024NAB Markets Research Disclaimer Financial Services Guide | Information on our services - NABYesterday’s inflation number for Australia was a big surprise, pushing up yields, particularly at the front end, and pushing back expectations for cuts by the RBA. Some commentators – not NAB – are arguing this reinforces the case for a rate rise. But NAB’s Ken Crompton says travel was a largely responsible for the rise. He also talks about speculation from the RBA’s Chris Kent about the neutral rate, being somewhat higher than many might have expected. This morning’s other big story is the fall in the Yen to a 38 year low, and the response from China.