If you’re re-thinking the balance of cash in your investment portfolio, start with these tips.
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If you’re re-thinking the balance of cash in your investment portfolio, start with these tips.
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Rural businesses are looking for equipment funding solutions that meet their needs in an evolving environment. Article originally published in The Advisor on 20/09/23
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The RBA has continued to keep borrowers on their toes in deciding not to raise the official Cash Rate at the July meeting, leaving the target rate at 4.10%. In the statement of the meeting they noted “Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe”.
The RBA has continued to keep borrowers on their toes in deciding not to raise the official Cash Rate at the July meeting, leaving the target rate at 4.10%. In the statement of the meeting they noted “Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe”.
The required slowdown in consumption and its impact on the economy is becoming more worrisome as central bank's take a hard stance on inflation vs growth.
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Fixed income is delivering good returns at a time when equities are being impacted by uncertain global markets.
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Jamie Bonic, Head of FX Investor Sales APAC, and Ray Attrill, Head of FX Research, joined ASFA to discuss the launch of NAB’s Super FX hedging survey.
The RBA Board is ‘Finely Balanced’ at the moment and we consider future meetings ‘live’. What does the Interest Rates pathway in the back half of 2023 & how can NAB Markets support commercial borrowers in managing this risk?
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The RBA Board is ‘Finely Balanced’ at the moment and we consider future meetings ‘live’. What does the Interest Rates pathway in the back half of 2023 & how can NAB Markets support commercial borrowers in managing this risk?
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NAB Private Wealth scoops up major international awards
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Inflation continues to dominate the markets narrative, what does the pathway for Interest Rates in 2023 hold & how can NAB Markets support commercial borrowers in managing this risk?
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Tapas Strickland, Head of Markets Economics NAB, James Sheehan, Head of Business Markets NSW/ACT, and Tracy Ferguson State Director Business Markets NSW discuss the February 2023 RBA meeting and outlook, inflation, the labour market, and potential risks ahead.
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Equities are likely to struggle once the global slowdown hits corporate earnings but there are always alternatives.
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After the wild ride for funding in 2022, the new year is presenting banks with a new set of challenges to work through using a pragmatic and flexible approach to managing the task.
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With inflation continuing to dominate markets, what does this mean for the pathway for Interest Rates and how can commercial borrowers manage this risk? Watch this webinar tailored to Regional & Agri clients now.
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With inflation continuing to dominate markets, what does this mean for the pathway for Interest Rates and how can commercial borrowers manage this risk? Watch this webinar tailored to metro clients now.
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With inflation at 40-year highs central banks are doing whatever it takes to bring it down.
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Central Banks around the world continue to lift interest rates to combat 40-year high inflation numbers, although are there signs inflation is peaking? What does that mean for interest rates and what are the implications for commercial borrowers? Watch now.
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Draghi’s government looks set to fall after three key parties failed to support him in a confidence vote which could complicate the ECB plans to deliver details on its new anti-fragmentation tool.
Many Australian exporters and importers are seeing their margins eroded, due to factors such as rising input costs and challenges with drawn-out supply chains. Another potential hazard arises from the increased volatility in currency markets, in particular the value of the Australian Dollar relative to the United States Dollar. This year alone, it has traded […]
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Q1 GDP – headline growth overstates strength, but still a good result.
Turning 40: Charting the rise of China since reform and opening up
Focus is now on whether the interest rate differentials between the US and Asia will start to matter for Asian currencies.
The key views of NAB and BNZ's economists and strategists
US small business owners tend to be Republican, and those who are member of the National Federation of Independent Businesses (NFIB) overwhelmingly so. Thus optimism among NFIB members surged to its highest level since 2004 in December and with the monthly increase, from 98.4 to 105.8, the largest since 1980.
Global equities were mostly lower overnight, dragged lower by the oil price. That added to an already uncertain tone following indications that the UK may be hurtling towards a harder Brexit than first thought.
When thinking about a title for today’s note and the impact the US labour market report had on Friday’s session, Aristotle’s quote ” the whole is greater than the sum of its parts” seemed quite fitting, but way too long for a title.
As the markets quieten down for the holiday break, we reflect on the tumultuous year we’ve just been through: Trump, Brexit, the rise of far-right politics and the tide of anti-immigration fervour.
It seems unlikely that Italy’s largest Bank, Monte dei Paschi di Siena, will meet today’s timetable to raise five billion Euros and provide a lifeline beyond March.
Tapas Strickland shows his knowledge of the Classics, describing yesterday’s RBA minutes as Delphic, in places.
Australia’s population growth remains strong by historical and international standards at around 1.4% y/y. That is 338,000 persons in the past year – nearly equivalent to the population of Canberra being added to Australia each year.
Janet Yellen gave a talk this morning reinforcing the commentary around the strength of the US economy, pointing to steady growth in jobs and rising living standards. A less rosy picture for Australia, of course, but, not bad enough for ratings agencies to act.
China’s capture of a US Navy Drone showed that the US dollar is not infallible.
The US dollar continued to rise after the FOMC rate decision yesterday and Janet Yellen’s more Hawkish tone.
The US Fed delivered their anticipated 25 basis point rate hike this morning, but they surprised markets by announcing an expectation of three further rises in 2017, one more than previously anticipated.
It’s been a rather uneventful night as the offshore markets did some more final positioning ahead of tomorrow morning’s FOMC meeting.
In Chile, Tuesday 13th instead of Friday 13th is considered to be an unlucky day.
How fast (or slow) is Australian employment growth?
Shock and awe is how one London based analyst described the Saudi’s decision to cut oil production even further at the weekend.
Mario Draghi had the markets wondering whether the European Central Bank would extend its bond buying program or start tapering its commitment. In the end, it seems, they’ve done both.
Sterling was the worst performing G10 currency overnight, in part because of worst than expected industrial production figures.
Back in March 2011 Lady Gaga’s hit “Born this way” was leading the music chart in Australia and Pink was number one on the Billboard chart.
The market’s knee jerk reaction to “no” outcome from the Italian referendum saw the Euro fall back by over a big figure for an hour or so, but that was it.
An early song from English progressive rock band Barclay James Harvest. No, it’s not on my playlist either.
Talk of oil cuts has been enough to see prices rise again overnight, up 15% this week. So what’s it doing to bond yields and the US dollar?
Oil prices shot up when OPEC announced that a deal had been reached in Vienna, giving special dispensation to Iran, but overall cuts across the group.
The key event this week will come from Vienna where ministers from OPEC are scheduled to meet and hopefully finalise the first cut in oil production in eight years.
Oil remains a keen focus with prices back up around $1 a barrel.
Rising oil prices from early this year and again from the middle of the year have been associated with rising medium-to-longer term US inflationary expectations (and indeed expectations globally).
Oil prices, of course, have a massive bearing on the rate of inflation throughout the world. That's why the outcome of OPEC talks this week are crucial.
In his 2007 best seller “The Black Swan” Nassim Taleb uses the life of a thanksgiving turkey as an analogy for explaining a black swan occurrence i.e. a tail event that is so remote that is completely unforeseen.
The song by Angus and Julia Stone (my absolute favourite Sydney band) made number 1 on Triple J’s Hottest 100 songs of 2010 and was responsible for propelling them on to the international stage. Big jet planes were also responsible for the 4.8% jump in US October durable goods orders reported last night and which […]
The USD continued to march a little higher, the Bloomberg spot dollar index up another 0.14%, gains mostly against the Euro, the Yen, and Sterling, the latter from some self-inflicted news.
The S&P 500 hit a new high overnight, largely because of a spike in oil prices as Vladimir Putin steps in and says he expects OPEC to reach a deal next week, and agreeing to limit production in Russia.
Our feature article in this Weekly delves into the recent slowdown in employment, which if it continued into 2017 could be the catalyst for further RBA easing.
A key question this week, for the AUD at least, is whether local exporters will continue to stand aside expectant of still better levels to initiate longer dated hedges and/or whether local real money will now look to lift hedge ratios.
For those who thought there was a chance Yellen may depart the Fed early, those notions were cast aside with Yellen indicating she was very much Stayin’ Alive and was intending on serving out her full four year term.
It’s been an overnight session of digestion and reflection for the market, one week on now from the Presidential election.
It’s been a night in which the US bond market has staged a mediocre rally – not quite a party – for most of the session, tilted to the belly of the curve and the long end. It looks to have been some profit taking after the surge in yields since the US election.
Leonard Cohen passed away last week and on my way in I was listening to a mix of folk tunes with the hope of finding one of his songs as a title for today’s note.
While it is reasonable to expect economic change, the degree is understandably uncertain given that in recent days some of the President Elect’s policy positions have been softened and meanwhile policy initiatives will need to be approved by Congress.
Following the severe earthquake this morning in South Island NZ, the Wellington CBD is out of action including the BNZ Harbour Quays building. BNZ Markets will be operating from Auckland / Christchurch and DR sites.
Prospects of greater US fiscal spending (infrastructure and tax cuts) under a Trump Presidency continue to buoy equity markets, while US bond markets are sold on the prospects that such policies are inflationary.
16 Years ago the Simpsons episode “Bart to the future” aired for the first time with a plot partly consisting of Lisa becoming president of the United States. Lisa tries to get the country out of financial trouble due to the high levels of debt left by the previous president, Donald Trump.
And it’s on two fronts this morning. The first is of course the election outcome as America votes to elect its 45th President. The second story relates to news breaking out of China yesterday that the authorities are stepping in to take the heat out of coal and steel-related prices.
Today feels a bit like a trip into the unknown with the US election entering its final stage as Americans head to the polls tonight.
Another big story for the Australian economy this year has been the strength in bulk export commodity prices.
Modest dollar strength and higher Treasury yields was the initial response to the US payrolls data but proved fleeting.
The focus for markets overnight was well and truly back on the UK with Sterling the stand-out performer overnight, trading this morning with a solid 1.24 handle, a full three big figures above where it opened the week.
This Fed meeting came with no press conference and updated forecasts for this meeting; that next comes at the December 15 meeting.
US Equities are off, the VIX is up, the US dollar is lower, US Treasury yields are lower and the Mexican Peso/Japanese Yen cross (-2.5%) is still proving to the be the FX market’s weapon of choice when it comes to reflecting sentiment regarding the prospect of Donald Trump.
There was no scary ending to the month of October with markets in general playing it cool ahead of a busy week of data releases, central bank meetings and what is turning out to be a fairly dramatic US presidential election.
This week we report on the views of Japanese clients of Australia following a recent trip to the country.
In the hour after it was announced that Hillary Clinton’s e-mails were the subject of a new FBI probe, USD/JPY dropped from Y105.50 to Y104.50, the S&P dropped 20 points or 1% with the VIX spiking by 19% and 10-year Treasuries dropped 2bps from 1.85% to 1.83%.
The Bee Gees 1979 classic “Too Much Heaven” pretty much sums up overnight news, with UK GDP printing much better than expected at 0.5% q/q against expectations of a 0.3% print.
Turbulence, a little known track by American pop punk band Bowling for Soup appears to be an appropriate title for today’s note. The song was written by Jaret Reddick after he asked a pilot whether he found turbulence frightening.
Seven years on from their 1974 classic ‘Whiter Shade of Pale’, Procol Harem’s light-hearted ode to the health benefits of fruit is set for a test today. Healthy on the body fruit may be, but possibly not on the hip pocket in Q3 according to our economists.
While European markets started the week in a lethargic mood, trading sideways for most of the day, US stocks opened higher following a series of merger announcements with the market also getting a boost from better than expected earnings reports.
With the RBA a keen inflation targetter, albeit within a flexible medium-term framework, each quarterly CPI reading provides an important update on current inflation trends and is a key input into the Bank’s forecasts.
Auction clearance rates in Australia this weekend hit 80% - not just in Sydney and Melbourne but nationally and for the first time since early 2015.
The ECB meeting came and went with absolutely no change in policy, as expected.
The revelation by Bank of Canada Governor Stephen Poloz following an as-expected unchanged monetary policy decision that the Bank ‘had actively discussed the possibility’ of further monetary policy easing at Wednesday’s meeting.
Ahead of today’s welter of Chinese GDP and activity data, the AUD is trading this morning almost bang on where it was yesterday afternoon.
Bruce Springsteen cautious man tells the story of a man that has doubts about his marriage and in a similar way markets have started the week in a tentative mood reflecting some concerns on the outlook.
In this weekly, we look at a number of indicators that are increasingly suggesting we are broadly at the bottom of the mining cycle.
In contrast Janet Yellen’s speech in Boston did - primarily in the form of higher Treasury yields at the longer end of the curve and with that late-day support for U.S. dollar. NY Fed President Bill Dudley said he expects a rate rise this year on current forecasts.
Time will tell whether the softer tone over the past 24hr is just a small correction or a sign that a bigger change is coming.
While the FOMC Minutes captured the market’s attention, for your scribe the most instructive comments came from the Fed’s Dudley who serves as the FOMC vice-chair in his fireside chat overnight.
Coming into work this morning I couldn’t help but think of Diana Ross’ Chain Reaction. It certainly was where US markets were concerned, with markets playing catch-up following the Columbus Day holiday to developments since the weekend.
Well it wasn't exactly midnight, but close enough. In a night that was expected to be relatively quiet given the US was celebrating Columbus Day, oil prices provided some fireworks after President Putin announced his support to a production freeze or even cut in oil output.
The past week has been dominated by bond yields moving higher as have oil prices.
Friday night’s US payrolls report underwhelmed for the second month running, showing a 151k employment gain.
Last night the ECB released its accounts of its September policy meeting and as expected there was no mention of tapering, the Bank reiterated its willingness and ability to ease further, if needed, while concerns over the lack of an uplift in core inflation was also evident.
Last night’s US non-manufacturing ISM report was certainly something to behold, with not only the headline read of 57.1 more than reversing the August drip.
Core global yields and the Euro have been disturbed by a Bloomberg report claiming ECB officials were considering QE tapering while early in the session the Pound was under renewed pressure trading to a new post Brexit low.
Selling of Sterling re-emerged in the Asia session yesterday and into London as the prospect of a “hard” exit from the EU loomed large.
Having just returned from a client tour this past week in the Riverina in southern NSW, there was also one topic that is currently front and centre for local farmers, and that was “rain”.
Who says fairy tales don’t come true with the Western Bulldogs and Cronulla both taking the silverware in the AFL and NRL grand finals over the weekend. Great results for both teams.
If Janet Yellen has been in the recording studio at the time, David Byrne might well have been directing his lyrics in her direction.
The main focus by markets ahead of Tuesday was no doubt the US Presidential Debate, billed as the showdown of the century.
Four hours before an estimate 100 million Americans tune in to watch the two wannabe leaders of the free world go head to head, and a Bloomberg poll published around 7pm Australian Eastern Time last night shows Clinton and Trump tied on 46%.
Attached to this week’s publication is a detailed slide pack covering the latest trends in Australia’s population.
Not a huge amount to say about Friday’s offshore markets (unlike Saturday night’s AFL preliminary final), characterised by a give-back of some of the post-FOMC stock market euphoria, fractionally lower US bonds yields and a slightly stronger dollar.
24 hours on, under my [central bank] umbrella is how the markets have interpreted Wednesday’s US FOMC meeting.
It’s now a sea of green in the US equity markets in reaction to the Fed leaving rates on hold this morning, leaving the Fed funds rate at 0.25-0.50%, as nearly universally expected.
A rather measured night again in the lead up to the FOMC tomorrow morning and the BoJ meeting today where the Bank has been honing its thinking on policy to lift inflation.
Markets have been tapping their fingers overnight in the lead up to the Fed meeting. Currencies have traded in very contained ranges, the USD only somewhat softer again with the US Treasury curve up 1-2 basis points for the session.
For this week’s weekly we take a closer look at Australian household balance sheets.
August U.S. CPI data turned out to be the driver of much of Friday night’s market price action. The 0.3% rise in the core CPI series pushed annual growth up to 2.3% from 2.2% - matching its post-recession cycle high and versus the 2.2% expected.
During the US dollar’s recent revival associated with deteriorating global risk sentiment and steepening yield curves, the commodity currencies – in particular the AUD and NZD – have been the hardest hit.
Mental preparations for another onslaught of selling bonds and equities offshore were put on the backburner with markets becalmed overnight.
Yesterday Brainard's comments appeased fears of an imminent hike in September, but concerns of a rising belief within the Fed that the benefit of keeping monetary policy accommodative is waning appears have left markets uneasy
The most market-sensitive events this week are an RBA speech Tuesday morning, the NAB Business Survey (also Tuesday) and the latest Labour Force statistics on Thursday.
Well there’s one conspiracy theory that has come to nought. That Fed Governor Brainard – a monetary policy dove to now – had become more policy hawkish and indicate that next week’s September 20-32 FOMC would be “live”.
If anyone harboured thoughts that global markets weren’t completely in the thrall of the ‘could they, would they?’ debate about the Fed’s 2016 intentions, they were disabused of the notion from the US get-go on Friday.
Three main developments overnight, a spike in oil prices, a somewhat more content ECB President, and a renewed AUD warning from RBA Governor Stevens in an AFR interview, the AUD in the wake of the interview pulling back from over 0.77 to 0.7642 this morning.
It has been a relatively quiet night for markets with the moves in GBP probably the major highlight. BoE Governor Carney faced the Treasury Select Committee in parliament and was quick to give himself a nice pat on the back for the bounce in business and consumer surveys in August.
The recent ramp up in Fed rhetoric aimed at putting the market on the scent of an imminent Fed funds rate hike took another blow last night following a sharp drop in the August ISM non-manufacturing index.
In offshore markets depleted by the absence of the United States off for Labor Day, latest UK economic data and gyrations in the oil price captured most of the overnight headlines.
This week, we thought we would focus on three themes: (i) Friday night’s US labour market data; (ii) this week’s upcoming Australian Q2 GDP data; and (iii) some thoughts on apartment settlements.
The August US employment report turned out to be something of a Goldilocks affair.
Jump (for my love) was a classic 1980s hit by the Pointer Sisters and one suspects would be particularly high in the Spotify lists of several Fed officials after last night’s weaker than expected Manufacturing ISM.
One of the first things that I learned when I arrived in Australia a few years ago is that spring in southern hemisphere countries doesn’t start on the same day.
As we went home yesterday evening, there was pretty keen anticipation of a forthcoming Bloomberg TV interview with Fed vice-chair Stanley Fischer.
Apparently this 1989 hit by the Rolling Stones was written by Mick Jagger as a response to Keith Richards solo effort “You don’t move me”.
The major development for markets last week was confirmation that the US Federal Reserve is looking to hike interest rates this year.
Janet Yellen’s Friday morning appearance at Jackson Hole proved not to be the damp squib that many were expecting.
In a night of still very contained major FX crosses, Fed commentary has started to kick in from Jackson Hole.
Only on line one and I already feel like I’m making this up, such is the state of market torpor in front of the Fed’s Jackson Hole symposium and as Sothern England basks in 30 degree summer sunshine – and uncharacteristically not for the first time this year.
It’s been a rather uneventful night for most of the major currencies, with the possible exception of Sterling.
The rise in the USD and short dated UST yields on the back of Fed vice-chair Fisher's comments over the weekend have been partly unwound in the overnight session.
The Australian dollar has opened this week close to 0.76 US cents, having lost some ground last week amid warnings from several key Fed speakers that the market is under-pricing the chances of a Fed rate hike this year
Friday looks to have shown FX traders to be the smartest guys in the room. Traditionally referred to as the ‘last market to clear’ (and so giving FX analysts such as this scribe a career) the dollar had put on a strong showing during the APAC session.
Short sterling positions were dealt another blow overnight by a blockbuster rise in UK retail sales in July where the weather and the low currency has seen a very good month for the High Street.
The overnight session was all about the July Fed Minutes.
It was an overnight session marked by two Fed speakers banging the drum (not as strongly as Keith Moon used to) warning that even the September 22 FOMC is not off the radar for a Fed rate increase.
Europe had a quiet day with many continental countries observing Assumption day. The Stoxx 600 index ended the day flat and the FTSE100 climbed 0.36% aided by another move lower in Sterling.
Spare capacity in the labour market seems to have been an important part of the RBA’s recent decision to lower the cash rate further. The linkage is low wages growth – which reflects this spare capacity – and which, as a key determinant of prices, impacts on the RBA’s outlook for inflation.
The previous Friday’s strong US payrolls report has become a somewhat hazy memory after a much softer than expected retail sales report on Friday that challenged prevailing confidence that the US consumer has entered Q3 in rude health.
Almost 24 hours after yesterday’s decision by the RBNZ to lower the OCR by 25bps and the NZD USD is almost exactly where it was before the rate announcement.
In delivering only 25bps cut to the OCR and which was more than 100% discounted ahead of time and the RBNZ’s latest 90-day bill track only implying one more cut, the NZD has predictably bounced sharply. It up just over 1% as we go to press.
The overnight session was neither strongly risk-on nor risk-off; the AUD has been testing higher levels overnight with the big dollar sold lower during the US session.
Breathe was Prodigy’s bestselling album in the UK despite the fact that radio play was restricted to the evening shows and although it would be hard to make any link with the song lyrics and market events.
Last week’s RBA rate cut has strengthened the argument that the RBA is uneasy about the outlook for Australian inflation.
There wasn’t much not to like about Friday’s July US payrolls report, the 255k rise in headline payrolls enhanced by 18k worth of upward revision to May and June and meaning that well over half a million more Americans are in work compared to just two months ago.
It was pretty much all about the Bank of England overnight ahead of payrolls tonight. As my colleague from London Nick Parsons reminded us, there was the real potential for the BoE to over-promise and under-deliver, net GBP shorts according to IMM data at the greatest level of this series.
Dido’s chorus to Eminem’s brilliant ‘Stan’ sums up last night’s US data and which was just about the only talking point in offshore markets last night.
It was a toss-up this morning between the Rolling Stones classic and “You Can’t Hold a Good Man Down” by James and Bobby Purify (et al), both in reference (or deference) to the performance of the Aussie dollar in the aftermath of yesterday’s RBA rate cut.
The market has continued to price toward the likelihood that the RBA will cut rates again at tomorrow’s Board meeting, pricing in this morning a 64% chance of an easing, with 36 of 47 economists surveyed by Reuters on Friday forecasting a cut this week.
Released overnight, the US ISM Manufacturing release for July was barely a miss, coming in at 52.6 against consensus of 53.0.
Weaker than expected US economic growth for the June quarter after an underwhelming outcome from the Bank of Japan on Friday set the tone for markets on Friday and at the open today.
Gimme Gimme Gimme was ABBA’s most successful hit in Japan, reaching No.17 on the billboard charts in 1979. It might be time to dust that record off today ahead of the Bank of Japan meeting decision at around 12.45pm AEST.
The revelation that the underlying CPI was not another repeat of the first quarter when growth was an anaemic 0.2% but pushed up this quarter to 0.5% had the market rethinking and repricing whether the RBA was indeed more likely than not to cut rates again next week.
Limbo Rock is the less famous (and in your scribe’s opinion underrated) hit song by Chubby Checker. No surprises for its inclusion today, with Aussie CPI out at 11.30am and key to the RBA August Board meeting next week.
After seven years without a hit, Elvis Presley reclaimed his title of “The King” following the release of Suspicious Minds.
Over the past few years, the rate of increase of Australian house prices has at times been of concern to the RBA.
US equities indices edged a little bit higher on Friday despite mixed corporate earnings while European equities ended the day practically unchanged despite the fact that European Flash PMIs for July were better than expected.
The ECB’s policy meeting has come and gone without any policy action, though none was expected. At 1.1025, the EUR sits where it was late yesterday in the wake of some intra-session ECB meeting volatility.
As we are about to press the send button, the RBNZ has just released it economic update and although a dovish tone was expected, the NZD has dropped 25/30pips to around 0.6988.
Yesterday’s RBA Minutes with its dovish take and concerns about the activity side of the economy saw the local rates market move to price in a higher above-50% probability of an August RBA move (from 59% to 63%).
In a quiet session US and UK equity indices edged a little bit higher buoyed by technology and financial shares while European indices drifted lower weighted down by energy shares following a sharp drop in oil prices.
Last week’s local data provided further indication that the recovery in the non-mining sectors has continued through the June quarter.
News of the (now failed) attempted military coup attempt in Turkey started filtering though about half an hour before the US stock market close, too late to have much impact on cash indices which closed fairly flat but early enough to see the S&P500 futures lose 0.4% after the NYSE close
It’s been a busy night in the UK, with PM Theresa May appointing her full new Ministry and of course the Bank of England meeting.
In 1968 John Lennon wrote this Beatles song after three weeks of meditation with Indian Gurus, equity markets have been on a tear for four days and now in a similar way they are also showing signs of fatigue.
Risk assets had another positive night boosted by the prospects of a new round of stimulus in some major economies and the removal of at least one source of UK political uncertainty.
SA economy making progress; NAB survey, Employment and BoE this week
Anna Leadsom has stood down as a candidate for leadership of the UK Conservative Party, paving the way for Home Secretary Theresa May to be the next Prime Minister, expected to be formally installed Wednesday after PM Cameron’s resignation.
he US non-farm payrolls headline rise of 287k comfortably exceeded expectations (180k) but wasn’t backed up by the subsidiary details in the report with the unemployment rate higher, small net downward revision to the prior two months payrolls and hourly earnings up just 0.1%.
It was an eventful news day for the AUD yesterday, even if the currency was little changed, and is not breaking new ground this morning, S&P yesterday changing the outlook on Australia’s AAA rating from stable to negative.
Genesis’ 1973 album laments the loss of English folk culture and increasing American influence. 43 years on, England can now have back as much of the former as it cares for, but has to hope it can look forward to even more of the latter.
Core global yields have made new record lows amid an increase in risk aversion following news that a number of UK asset managers led by Standard Life were suspending redemptions on their property funds.
The USD weakened overnight, in a night of focus on Europe with the US out for its Independence Day holiday.
The early part of last week saw a continuation of post-Brexit equity market weakness, falling bond yields and generally heightened uncertainty.
The outcome from this weekend’s Australian election remains too close to call. This uncertainty and lack of a clear majority has had a mild negative influence on the AUD/USD at the open.
As a BBC commentator described it this morning, providing it doesn’t violate the laws of thermodynamics, anything can happen inside the British Conservative Party.
Lots of soul searching not doubt from EU leaders on day two of their summit with UK PM Cameron back home.
Whether it’s a near to end-quarter rebalancing or just some short-term perceived value after the knee-jerk post-Brexit sell off, risk appetite had something of a positive session overnight with equities and top-tier bond yields higher.
Equity markets on both sides of the Atlantic ended the day sharply lower, the British Pound fell another 3.6% and demand for safe haven assets boosted gold and dragged core global yields lower.
It’s now nearly 72 hours since British voters voted to exit the European Union and we examine the aftermath of this decision.
Lows for the day on Friday in all things GBP and AUD and highs for the USD and US Treasury prices came early to mid-afternoon Australian time almost as soon as it became clear the UK had voted for Brexit.
Despite stormy weather in London and the south east, turnout has been reported to be high and although markets appear to have ‘Remain ‘ as the most likely outcome, recent history suggests that voting outcomes don’t always end as expected.
Alan Oster discusses the influence of the sharing economy and explores how fast it is growing and its impact on the business community.
Pink Floyd’s 1979 song featured on The Wall tells the story of a couple who have treated each other very badly yet are devastated at the prospect of their relationship ending. This seems somewhat appropriate with us now just 9 hours away from polling getting underway in the UK EU referendum.
Ahead of Thursday’s UK referendum, Yellen’s testimony to the Senate banking committee was the second big event of the week. Unsurprisingly, however, we got a similar message to the one we got from last week’s FOMC.
The risk-on mood that developed as Asia markets opened yesterday on the back of the weekend poll from the Sunday Mirror pointing to a swing back to the remain vote gathered more force overnight, especially in European markets.
Brexit and local farm conditions too Thursday’s UK EU Referendum will occupy market attention this week. A poll being conducted by ComRes for the UK Sunday Mirror at the time news of the assassination of British MP Jo Cox hit the wires revealed a switch in voting favouring the remain vote. The percentage of those […]
Markets being what they are, last Thursday’s tragic news of the slaying of UK MP Jo Cox, campaigning on behalf of the ‘remain’ side in front of Thursday’s EU referendum, elicited a strong positive response in all things Sterling, as well as supporting risk sentiment more broadly.
Yesterday’s fall in the Nikkei and strengthening of the Yen on the back of BoJ inaction and heightened concerns around the outcome of the UK EU referendum set the tone to the early part of the overnight session.
The US Fed kept its policy rate unchanged (between 0.25% and 0.50%) as expected, however the tone of the statement and forecast revealed a more dovish stance.
As US markets close and Asia opens this morning, further damage to sentiment has been relatively limited.
Friday night, Sterling was hit hard soon after London had shut shop for the week, on the publication of an (internet) poll by ORB of over 2000 respondents for the UK Independent newspaper, showing a 55/45 split in favour of ‘Leave’.
Rebel One being BTMFJ who were reported to be on the verge of rescinding their JGB Primary Dealership and Rebel Two being Commerzbank, reported to be considering storing cash in vaults rather than pay the ECB for the privilege of depositing excess cash with them.
We are now seeing signs in other parts of the world of rebellion by private sector banks aimed at circumventing the deleterious effects of negative central bank policy rates and government bond yields.
The perception of a lower for longer Fed has slowly but surely brought back an improvement in risk sentiment.
US equities ended day up between 0.5% and 0.65% with energy stocks leading the way on the back of gains in oil prices.
Is any week not a relatively busy or important one? This week, the key focus in Australia will be on the Reserve Bank’s June Board meeting
Looking at the spectrum of forecasts ahead of the release, the 38k print for May was 52k lower than the lowest forecast surveyed by Bloomberg while consensus was at 160k.
Markets mostly treaded water, and most US economic data was bang in line.
The final May Eurozone Manufacturing PMIs were left unrevised at 51.5, while the US Manufacturing ISM headline popped a little higher to 51.3 from 50.8 (50.3 was forecast).
Markets ended the month of May in a cautious mood amid mixed US data and a Guardian poll that suggested Britain to be more in favour of leaving the EU.
As far as the foreign exchange markets were concerned, the USD was a touch softer overnight after having made some gains in the Asia session yesterday.
The past week has seen interest rate markets continue to receive warnings from various Fed speakers – including Fed Chair Yellen – that US interest rates are likely to rise in the next few months.
In her much awaited Harvard University appearance, Fed Chair Yellen endorsed recent Fed rhetoric, noting that it would be “appropriate” for the Fed to raise the Funds rate if economic growth picked up as expected and the labour market continued to improve.
A quiet night overnight with US Treasury yields moving 3.5bps lower to 1.8%, alongside weaker than expected core durable goods and capex orders.
It’s been another night of measured markets with both European and US equities closing higher, US Treasury yields a little higher net on the day and the USD marking time. There has been a little more evident appetite for Sterling, while the Canadian dollar was also a little stronger, helped by higher oil prices and the Bank of Canada leaving rates on hold, as expected.
US and European equity indices had a solid night with gains in financial and technology shares leading the move higher. The USD was stronger against most other currencies although GBP was the outperformer. Meanwhile US Treasury yields ended the day higher along the curve.
Today’s weekly focuses on what the low inflation environment means for monetary policy, and what discretion the RBA has in “looking through” low inflationary periods.
Markets have been generally drifting with FX, equity markets and bond yields trading in contained ranges. The short end of the US Treasury curve edged a little higher.
European and US equities ended the week in positive territory and the mild positive tone to the overnight session helped the S&P 500 move back to black for 2016.
A perfect opportunity for a Bee Gees classic with more Jive Talkin’ amongst US Fed officials with Lacker and Dudley hitting the wires overnight following Wednesday’s more hawkish Fed Minutes.
It was the release this morning of the FOMC April Minutes that’s gotten the attention of the wires and a noticeable chunk of market reaction to boot in rates, currencies, equities and gold.
US equities fell overnight and the US Treasury curve flattened to its lowest level since 2007 after solid data and hawkish Fed talk increased market’s expectations of US rate hikes.
Be grateful for small mercies. It’s a good job this 1971 T.Rex classic popped into my head as I was alighting at Wynyard station this morning, or else you might have been subjected to the ultra-cringe-worthy 1968 Dolly Parton ditty, “I’ll oil well love you” (I kid you not).
It was a quieter week for Australian markets after the previous week’s very large moves. The Australian dollar still ended the week lower, as markets continued to speculate that the RBA will follow up with another interest rate cut in the months ahead and as Chinese economic data disappointed.
The rising US dollar in Friday’s APAC session gathered fresh momentum from incoming US data.
In a shock revelation, the Dallas Fed has published a note on its website saying that the impact of the Chinese economy on the U.S. has notably increased over the past two decades.
The rise in oil prices overnight were not enough to prevent retail driven decline in US equity markets. The US dollar was weaker across the board and a solid 10y US Treasury auction amid a cautious mood helped core global yields move lower.
The US Energy Information Agency revised up its forecasts for oil prices for this year and next, lifting its forecast for WTI for this year by nearly $6/bbl to $40.32 from $34.37.
The USD has continued its ascendency with the DXY index up for a fifth day in a row.
The USD has slowly, but surely continued its rebound while equities on either side of the Atlantic fell for a second consecutive day.
No, the title is not a summation of Australian Treasurer Scott Morrison’s first Budget handed down last night. Rather it looks to be the most apt description of market price action – in FX at least – apropos the smart overnight session reversal in the fortunes of the Japanese Yen and the Euro.
While yesterday’s fall in the Nikkei, partly reflected a catch up move given Friday’s holiday in Japan, this negative sentiment spread throughout Asia with all markets excluding Thailand posting small decline for the day.
The 2004 Saturday Night Live fictional character, recently brought back to life in song on Cortney Barnett's brilliant debut album, would have been in her element on Friday.
For US equities, it was a case of one bad apple in the bunch with investor Carl Ichan stating he sold his stake in Apple.
So it is that following yesterday’s CPI report, NAB altered its 3 May RBA call to now expect a 25bs reduction in the Cash Rate (to 1.75%).
While the market is very sensitive to the CPI and the AUD and rates markets might see an immediate knee-jerk reaction, the market is not hanging on this number as one that might swing the RBA into action or inaction at upcoming meetings.
Tomorrow’s CPI will be another low print but unlikely to sway the RBA into easing monetary policy given the continued resilience in the non-mining economy. NAB’s forecast for the March quarter CPI is for Australia’s official inflation rate to be 1.6% y/y (after 1.7% in Q4), the sixth quarter below the 2-3% official RBA target range.
The Eurostoxx 50 ended 0.75% down and the S&P 500 -0.18%.
The AUD has flown back down with the 77 handle this morning, pulled back somewhat by a dip in oil prices for once, WTI down $0.59 to $43.60 and Brent off $0.91 to $44.89, the Aussie’s commodity cousins, the CAD, NOK, RUB and the NZD all lower this morning.
Oil prices took another leg higher last night following a US Energy Information Administration report that showed a sharp decline in US distillate stockpiles.
Broad USD dollar weakness and higher oil prices have boosted risk assets overnight with energy and material shares the outperformers in both Europe and the US.
When the US after-market for oil opened early in our day yesterday, WTI and Brent opened around 6% down on Friday’s close.
Regardless of whether an agreement yesterday by major producers to freeze oil production would have had any meaningful impact on oil prices beyond the psychological boost it might have provided.
Risk sentiment took something of a breather overnight without going into reverse.
Risky assets have continued to benefit from an improvement in sentiment. Bank stocks have led the surge in equity markets and most commodities have also enjoyed some gains, despite of a pullback in oil prices.
Yesterday’s NAB Business Survey bolted a stronger 76 handle on to the AUD, the currency finding support through the day and again overnight, trading this morning toward the top of its overnight range, currently at 0.7685/90, up 1.2%.
European markets ended the day in positive territory boosted by Italian banks following hopes of a government support package while in the US, equity indices erased early gains and ended the day marginally lower.
RBA more open to the need to cut again but for now the reasons aren’t sufficient.
A fairly uneventful offshore session on Friday saw US stocks recover some of Thursday’s losses, bond yields pushing back higher while the US dollar was softer across the board.
Sorry, I couldn’t resist the title seeing as how Janet Yellen, Ben Bernanke, Alan Greenspan and Paul Volcker are all about to jump up on stage together.
An improvement in risk appetite has helped global equity markets recovered some grown overnight with the Nikkei a notable exception. FOMC minutes revealed an April hike was discussed, but a cautious approach appears to be well entrenched. A pick up in oil prices contributed to the positive move, but the strength in the yen continues to weigh on Japan’s equity market.
Local market’s finished up on Tuesday in a distinctly ‘risk-off’ frame of mind, and that sentiment has extended throughout the European and US sessions
In what was a quiet night for markets the softness in oil prices spread into other commodities and it has weighted on the AUD and other commodity related currencies.
The key Australian event of the week will be the RBA Board Meeting tomorrow along with a speech by RBA Assistant Governor Kent on Wednesday.
There was nothing not to like about Friday’s US data deluge. Payrolls just beat expectations at 215k vs. 205k with trivial revisions.
It’s been a night of consolidation in the main as markets await the arrival of key data over the next 24 hours with Super Friday’s deluge.
Equities and non-US dollar currencies continue to bask in the afterglow of Janet Yellen’s Tuesday night speech.
Fed Chair Janet Yellen has reiterated her views that it is appropriate for the Fed to “proceed cautiously” in raising interest rates.
Before the official start of the 4-day Easter break, there was a bit of good news about the US economy.
The commodity currencies were sold lower overnight, with the AUD feeling the brunt of the selling.
RBA Governor Glenn Stevens speech yesterday came and went without any fanfare as far as AUD comment was concerned
Two Fed officials suggesting Fed hikes could be coming sooner rather than later.
Labour market suggests RBA on hold but keep an eye on inflation expectations Markets again moving around sharply with a less aggressive Fed (two rate hikes now expected in 2016 versus four previously) seeing the US$ broadly weaker and $A stronger. Australian labour market data show slower trend employment growth in recent months, though some […]
Following a tumultuous Wednesday and Thursday, markets went out with something of a whimper on Friday.
Nothing better than Tom Petty to the end the week.
As expected by most, US Fed Officials left the Fed funds rate unchanged at 0.25% - 0.5%.
Any excuse playing homage to David Bowie (originally unreleased promotional film shot in 1969, in case you wondered).
The past week broadly saw an extension of the prior week’s price action, which broadly continued the rally in commodity prices.
Central banks are again in the spotlight this week.
The centrepiece of overnight attention was always going to be the ECB policy meeting.
This morning the RBNZ cut its policy rate by 25bps to 2.25% and it signal that further easing may be required.
Investors remain concerned over the apparent soft demand for China’s exports.
Ever had one of those moments when you start the day and you have a rather weird moment to start the day?
Price developments over the past week supportive of NAB view that markets had become overly pessimistic on the growth outlook – commodities, equities and the $A all rally strongly; bond yields rise sharply.
We weren’t alone on Friday thinking that the risks heading into the US employment report were for a disappointing headline non-farm payrolls print
It has not been a massive night in terms of market direction, the Australian dollar again capturing interest and making some further net gains.
Well, not a storm, but the AUD is riding higher after much stronger-and-expected GDP for the December quarter.
China’s decision to reduce the required reserve ratio on major banks (-50bps) set the tone in yesterday’s Asian session
Chicken Little would have been in his element today. The sky may not be falling, but plenty else is.
Markets calm down but plenty on the menu this week
Plenty of official hand-wringing regarding downside risks to global growth and which was reflected in the communique issued on Saturday after the 2-day G20 meeting of finance ministers and central bankers in Shanghai.
It’s been an interesting night as far as the markets were concerned.
It was a session of two halves with a risk off during European session spilling into the first part of the New York sessio/
Risk markets have turned turtle overnight despite some reassuring words on monetary policy.
European and US equity markets started the week in a positive tone boosted by a commodity led improvement in risk sentiment.
Another volatile week in markets with equity markets up and the bond market also rallying on expectations of the US Fed delaying further rate hikes.
The 1986 film flop starring Madonna and Sean Penn cost $17mn to make and grossed just $2.3mn at the US box office.
In the wake of yesterday’s weaker employment report, the AUD/USD jagged down from around 7182 to 7140 and that’s proven to be a base overnight in a 30 point range.
It was something of a risk-on night with commodity and emerging market currencies back in favour for once.
The global equity rally that began on Friday has started to show signs of fatigue
Global equities extended their Friday rally helped along by a strong lead from Asia.
RBA watching international developments closely; far from panicking about the current state and momentum in the domestic economy with signs of the economy’s emerging rotation
European and US equity indices ended the week on a positive note, boosted by a rebound in bank stocks and a jump in oil prices.
Janet Yellen did her return testimony overnight, this time to the Senate.
NAB Business Markets Podcast – February 2016 Video transcript (Word, 26kb)
If we had to try and summarise the best part of three hours of testimony before Congress by Fed chair Janet Yellen in one sentence, it would be something like “Janet fails to go full dove”.
When the IEA released its monthly report last month, it caused quite a flurry warning “the oil market could drown in over-supply”.
The impact of oil complicates the outlook.
Yeap, the heading says it all. We had a brutal price action overnight with risk assets hammered while safe haven assets were bid.
Welcome to and best wishes for the Year of the Monkey.
In the words of my BNZ colleague Jason Wong, not even strong words by ECB President Draghi and BOJ Governor Kuroda have been enough to talk down their currencies against the big dollar’s recent dip.
There’s still two hours to go until the New York close, but foreign exchange markets are having their biggest night of the year so far.
In the aftermath of the RBA Board meeting, the AUD was whipped around, initially rallying on “no change”
Friday’s BoJ powered equity rally stalled overnight with disappointing data releases and fading hopes of output cuts in oil weighted down on sentiment.
Domestic economy still arguing for unchanged RBA policy
Friday’s sharp improvement in global risk sentiment sparked by the Bank of Japan’s largely unexpected decision to join the ECB, Danish and Swiss National Banks
Mixed oil messages were the main source of market volatility overnight.
The FOMC post meeting statement played a very straight bat, not locking themselves in to one course or the other as far as the March 17 meeting decision is concerned.
And yes, it was still all about oil with another classic short squeeze, this time seemingly triggered by comments from the Iraqi Oil Minister speaking at a conference in Kuwait.
The markets make significant reversals on little fundamental developments, suggesting positioning and sentiment had become extreme.
Oil having been the main driver of most of the market price action of the past two weeks, it was Friday’s near 10% rebound that was the catalyst for much of Friday’s retracements.
ECB talk of further easing in the future boosted risk assets overnight. Equities posted solid gains in Europe and in the US they look set to end the day in positive territory.
Another volatile night my friends. Well that was as far as equity markets are concerned the E600 European index down a cool 3.2%.
Flipping through the Eagles song list on the way in, none of the many great Glenn Frey-penned tracks struck me as particularly applicable titles to describe overnight markets.
The wild start to 2016 has continued in the past week. Equities, commodities, commodity currencies, and yields are all lower.
With US markets closed in observance of Martin Luther King Day, the relatively quiet overnight session is probably not reflective of the current collective mood.
In a redux of the previous Friday, slumping oil prices were the primary catalyst for the latest pressure on commodity and emerging market currencies and global risk assets, alongside safe-haven support for Treasuries.
Today’s title is our final tribute to the late musical genius, David Bowie. Where are we are now? Is the first single from David Bowie’s 25th album released on the morning of his sixty-sixth birthday in 2013.
Less than hard-core Bowie aficionados can be forgiven for not immediately humming this track, which features on the Blackstar album released two days before his untimely death.
‘Under Pressure’ was a particularly apt title to yesterday’s daily from my colleague Rodrigo by way of homage to the late great David Bowie.
Today's title is not only fitting to what has transpired in markets over the past 24 hrs, but it also serves as a tribute to the passing of a music legend.
No news in falling commodity prices. The big questions for 2016 are residential construction cycle and the non-mining economy. We expect RBA to be on hold right through 2016.
On another day, news of a near 300k rise in US payrolls, still quite benign earnings growth and a steady but near-full employment unemployment rate (5.0%), might have sent equities and the dollar to the moon and bond yield higher.
Similar themes from yesterday are at play today– China in the spotlight with its devaluing currency and equity market shenanigans; lower commodity prices and global equity markets tumbling; and a flight to the safety of the Yen.
EGM Capital Financing, Steve Lambert, discusses two common themes that were present over the past 12 months - Innovation and volatility. It seems that 2015 saw more firsts in the market while at the same time it seeemed markets were closing just as quickly as they opened.
Market jitters continued, with another sea of red for equity markets and Yen being the favoured currency.
It was a more “normal” overnight trading session, following the big risk-off move on Monday night.
The first day of trading for many markets was a memorable one, with some big falls in equity markets. With the plunge in risk appetite, the Yen was the best performing currency
Investors ended 2015 in a defensive stance. Following the risk aversion tone seen in the previous day, equity markets were sold on Thursday while core global bonds benefited from a safe haven bid.
Ever get the feeling that you’ve been here before?
Some argue that there can’t be too many better analogies to predicting markets than playing cards or rolling dice, so the late Lemmy’s classic The Ace of Spades from the band Motörhead seems very apt this morning.
Heading into Wednesday’s New York close, the S&P 500 is showing a gain of about 1.2% on the day, which equates to a rise of just 0.2% year to date.
Moves in oil prices remain the main driver for markets amid a decline in trading volumes ahead of the Christmas holiday break.
Spanish politics has been a watch point for markets since the weekend with the national election not producing a clear majority for any one party and not an obvious coalition likely to be formed, according to Spanish political commentators.
We draw attention in this Weekly to the importance of growth in the population to the economy and how population growth has slowed in recent years.
Friday was one of the four ‘triple witching’ occasions of 2015 (expiration of stock index futures, index options and individual share options) –sometimes known as freaky Friday.
While European equities closed higher overnight, the US market opened down and it’s remained that way into the last hour of trade.
NAB Business Markets Podcast with Mark Todd and Peter Hartley.
Nine and a half years on from the last Fed rate hike and seven years on from when interest rates were first set at the effective zero lower bound (0-0.25%) the Fed has seen fit to sound the death knell for ZIRP, lifting the target rate for the fed funds rate to a range of 0.25-0.5%.
Unlike the rest of us who are now waiting to see what Janet Yellen delivers this time tomorrow, RBA Governor Governor Glenn Stevens has gone early, the AFR publishing its now traditional end-of-year interview with him overnight.
Initially it was a choppy night for markets, carrying on with last week’s risk-off mood with oil initially testing new lows and European stocks heavy.
An important week as Australian markets prepare to wind down for Xmas and the summer holidays, with the MYEFO Budget outlook on Tuesday expected to reveal a mild worsening in this year’s deficit to $38bn and to bring to account lower long-term growth assumptions.
Friday night session saw a surge in risk aversion with sharp losses in equity indices, the USD underperformed against other majors while safe haven demand pushed core global yields lower.
A lot of the attention overnight remained centred on the commodity space with oil prices down another 1%, Brent crude at $39.70, down 0.97%.
As we are about to press the send bottom, the RBNZ has cut its key rate to 2.50% from 2.75%. In the statement the RBNZ has noted that it expects to reach its inflation goal at current policy settings and that the rise in the exchange rate is unhelpful and further depreciation would be appropriate.
The AUDUSD dipped below the 72c mark overnight amid the ongoing weakness in oil and bulk commodities.
Commodities were front and centre of market attention overnight, with oil prices taking another sizeable hit, both WTI and Brent crude down between 5-6% in the wake of OPEC officially abandoning its 30mb target late last week.
Economy a little ahead of RBA forecast track.
The US employment report virtually matched expectations (NFP +211k, unemployment steady at 5%) and effectively confirms a Fed lift-off in two weeks’ time is a done deal.
The violent upwards reaction in all things euro in response to a set of ECB decisions that underwhelmed expectations.
“Were the FOMC to delay the start of policy normalization for too long, we would likely end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting both of our goals,” Fed Chair Yellen told the Economic Club of Washington overnight.
NAB Business Markets Podcast – RBA & US Fed Christmas Messages with Mark Todd
The AUD is back trading with a 73 handle for the first time since 19 October, helped along by a disappoint US ISM manufacturing print.
Well not quite, in terms of manic that is. China received the official nod from the IMF for inclusion in the SDR as entirely expected
A huge week for data and events.
US markets were open on Friday, though more in body than spirit. The major indices were little changed.
In the 1975 Steely Dan classic, the song Black Friday refers to a 24 September 1869 ploy by a group of wealthy US investors to corner the gold market and drive the price higher, but who were subsequently foiled when the government got wind and released $4 million worth of gold onto the market.
It’s 100 years ago today that Albert Einstein formally presented the results of his eight year study into gravity – the general theory of relativity. Good on you Albert.
Markets were rattled in the early part of the overnight session following news that Turkey had shot down a Russian fighter jet near the Syrian border, after allegedly repeated warnings of Turkish airspace violation.
The USD got off to a cracking start this week, gaining against all the majors, and taking EUR/USD below 1.06 for the first time since April.
An important week for Australia, with a speech by the RBA Governor Tuesday, the release of key investment figures that feed into next week’s GDP, as well as the latest survey of investment intentions for 2015-16.
Friday’s session was hallmarked by comments from ECB President Draghi, which kept markets on the scent for a range of easing measures at next week’s hotly-anticipated meeting.
It’s been a night of consolidation for currencies with the US dollar giving up some ground, the Bloomberg spot US dollar index losing 0.67% overnight.
Hat tip to one our London traders for plagiarising today’s title.
It is a bit odd coming in to see hard commodity prices under the pump (including a $2 drop in iron ore prices, new cycle lows for copper and oil off another buck) but the AUD at the top of the G10 FX leader board.
In a relatively quiet session, the impact from the Paris attacks on global markets has been fairly muted. The USD is stronger against all G10 currencies with the euro and NZD sitting at the bottom of the leader board.
We review last week’s stunning Australian labour market data. While we don’t believe the large moves in either the employment or unemployment rate, we believe the signals - that employment is strengthening (driven by NSW and importantly an improving trend for QLD)
News of the multiple terrorist attacks in Paris and claimed by Islamic State came about 4.30pm New York time so after futures markets and US stock exchanges had closed for the week but before spot FX and cash bonds had finished.
Welcome to Friday the thirteenth. Cautious is advised for anyone suffering from triskaidekaphobia.
Lots of interest overnight whether ECB President Mario Draghi would throw more fuel onto the ECB stimulus expectation fire, schedule to speak at a BoE sponsored open forum on Financial Market Reform event in London.
Not a big night as far as market movements are concerned, one extension of a theme being the continued ascendancy of the big dollar that has gained a little more momentum, the Bloomberg spot dollar index up 0.12%.
A night of consolidation for markets with inconsequential data not pushing markets one way or the other.
Another busy week in Australia with the NAB Business Survey, Consumer Confidence and October Labour Force data all released.
Friday’s US payrolls report delivered across-the-board strength and markets responded to script, the dollar and bond yields both sharply higher but equity markets not sure whether to embrace the more positive US growth signals or fear the seemingly near-inevitably of December Fed ‘lift-off’.
Not a massive session as far as new market direction was concerned overnight ahead of payrolls tonight.
Markets took their cue from Fed Chair Janet Yellen overnight, testifying before the US House Financial Services Committee on bank regulation.
A rising commodities tide lifted all boats overnight, with an improved tone in risk evident in equities, bonds, and currencies. The AUD outperformed after the RBA stood pat yesterday. It is a very busy day ahead.
This week in Australia is of course all about the RBA Board meeting on Tuesday and the November Statement of Monetary Policy on Friday. Our special focus this week is on a number of charts showing that the RBA has already eased pro-cyclically and the non-mining economy is improving.
Currencies, for the most part, took a back seat in a largely so-so session for broader financial markets.
Unlike Wednesday and Thursday morning (post FOMC, RBNZ), Friday was not a big night for markets and following the BoJ’s earlier ‘no change’. End of month rebalancing flows appeared to dominate price action, meaning a slightly softer US dollar (DXY -0.35%, BBDXY -0.42%).
With the echo of the FOMC still ringing in its ear, the market re-priced the odds of the Fed moving in December, lifting the probability to a 50/50 call, those odds having been tracking at a less than one in three chance before the FOMC.
Global concerns and the potential negative feedback loop to the US economy and inflation have been dialled down. At the same, concerns about the strength of the labour market have been somewhat dialled up, the Fed noting that “the pace of job gains slowed and the unemployment rate held steady”.
The US dollar sits near the top of the currency leader board this morning, retaining its composure, though more by default of weakness elsewhere.
It was a contained night for markets, equities a little heavy for no apparent reason other than perhaps some nerves ahead of Thursday morning’s FOMC announcement.
Watching the tears streaming down the face of Pumas head coach Daniel Hourcade a couple of hours ago, ‘Don’t Cry For Me Argentine’ was the obvious title for today’s missive, but it’s already looking a little overused in the Twitter-sphere.
ECB President Draghi stepped up to the plate last night, setting equity markets alight and scuttling the EUR. Draghi effectively preannounced further easing in policy at its 3 December meeting.
Not a massive night for currency markets and markets in general, though with risk-off tinges; stocks were flat in Europe and softer into the US close.
The NZD at least has shown some movement and to some surprise, the Canadian dollar sits at the top of the G10 FX leader-board.
Though there isn’t too much to say about last night’s markets and after the local market yesterday was, within 15 minutes of the China data, already checking out the coming weekend’s weather forecast.
In this weekly, we consider the implications for monetary policy of last week’s independent mortgage rate increases by Westpac. RBA expected to watch how other intermediaries respond to the move and to assess how the move impacts the economy.
Friday was largely a lower beta replica of Thursday and where, recall, the higher US core CPI and further drop in US jobless claims were the key market drivers. Momentum carried though to Friday’s session, and wasn’t undermined by US industrial/manufacturing production data that was soft.
Much of Wednesday’s market price action in currencies, equities and bonds has been reversed. The exceptions here are the commodity currency trio of NZD, CAD and AUD which for the most part are continuing to resist the allure of a weaker US dollar.
Led Zeppelin (1973) for the benefit of a generation younger than this scribe (i.e. most of you).
In the five days through this Monday, the AUD had been the best performing major currency, rallying by just shy of 4% against the US dollar.
With the whole of North America on holiday (albeit US stock markets were open) it has been a predictably quiet night.
In this weekly we examine through the lens of job advertisements, the net effect for the labour market – and by implication the broader economy – of the many conflicting cycles currently impacting the evolution of the Australian economy.
AUD was the best performing G10 currency on Friday, and GBP the worse, the latter initially suffering on some dismal UK trade figures and which contrast starkly with the Eurozone’s current account surplus status.
The Sep FOMC minutes came and went and when all is said and done, it has not clarified whether the Fed is likely to be hiking before year end or later.
The rapid reversal in post-August 11 Emerging Market and commodity currency weakness continued with a vengeance overnight.
The IMF is hogging the news headlines overnight, though markets have long since given up seeing much information value in the now customary 6-monthly downward revisions to its global and country-specific growth forecasts.
It was a night for risk assets again with the S&P closing out its fifth day of gains, up another 1.85% with EM and European equities also performing well, the Eurostoxx 600 index up a cool 3.01%, with a sea of green gains across this writer’s screen.
In this Weekly, we set out six reasons why the RBA should not cut rates. Before that, it’s worthwhile to review Friday’s US payrolls report that was one out of the box, softer than expected in almost all respects.
Anyone looking for redeeming features in Friday’s soft US payrolls report was reduced to noting that the weakness in average earnings (flat on the month and unchanged at 2.2% y/y) may have been down to the fact that the Sep 15 mid-month pay day was excluded from the calculation
At the start of a new quarter, markets are struggling for a clear frame of reference, not yet sure whether bad economic news is good news for risk if it keeps the Fed at bay for longer, or is bad news because it serves to amplify concerns about the overall health of the global economy.
The US ADP employment report last night printed +200k, seemingly confirming that the US economy continues to create more than enough jobs each month to keep the unemployment rate trending down to – and through – the so-called NAIRU rate (below which further labour market strength risks accelerating inflation)
A quieter night overnight, with no large moves, but no strong reversals either. US equities eeked out fractional gains, while Europe was still weak. Yields were a little lower and currencies in G10 for the most part flat. Oil did rise and Glencore, yesterday’s prophet of doom, bounced 17%.
It’s been a combination of factors that have coalesced to weaken the AUD overnight, but it has not been a cathartic move down, just another orderly look under 0.70. There have been weak equity markets in both the Europe and US.
In this weekly update we tease out some implications of slower population growth that’s been evident now for the past two years, with a further step down reported by the Australian Statistician last week.
Friday’s tone was set by Fed Chair Yellen, early in the Sydney session. In this, she backed up the Fed speakers post the FOMC, which have reiterated that the Fed are looking to raise interest rates this year.
Another choppy night of trading with hints of risk-off still dogging equity markets and supporting bond markets, while commodities were non-directional with copper down marginally but other metals mostly rose, including the yellow metal.
It’s been a night of mixed emotions as far as risk sentiment is concerned. It was not helped initially by yesterday’s weaker China manufacturing reading, and the quickly emerging shadow of Volkswagen’s issues.
It’s a bit of pick and mix for explanations regarding market moves in the last 24 hours. There has been no top tier economic data, no new speeches, or surprises.
Not a massive night for price action on the currency markets, but what we did see was signs of a little further strength in the USD.
In this Weekly we have included trip notes and reflections from Ivan Colhoun, Chief Economist, Markets, who has been visiting clients in the UK, Europe and the Middle East.
Not sure this was the reaction the Fed were looking for when they decided to pause and give a shout out to the struggling EM economies and global economic risks.
The time arrived but the Fed couldn’t bring itself to raise rates for the first time since the Financial Crisis. In a hugely anticipated FOMC meeting, the market had priced just over a quarter percent chance of a hike, and just under 50% of economists expected a move, but they remained on hold.
Another relatively calm and comfortable session heading into the FOMC meeting. With markets and economists split on the outcome, something will move if the Fed does, or it doesn’t. So enjoy the quiet day today, ahead of tomorrow.
Do It Already is the headline of a Bloomberg article today, but mirrors the sentiment in articles across the press and the discussions on our own floor. Markets are like rabbits in spotlights, uncertain as to which way to shift, just in case there is a move by the Fed.
There is a flurry of opinions, newsflow, chatter and speculation about the Fed this week, but at the end of the day, there isn’t much that is new to report for markets. Still waiting for the FOMC.
In this weekly, we review the week that was, the week ahead, and NAB’s David de Garis gives his reflections on a recent visit to South Australia.
It’s been relatively quiet from Friday and likely to stay that way for a few more days yet. The news flow has been limited and what there has been, has been clouded by one-offs.
It was the makings of a risk-on mood for markets overnight and a night when the Bank of England’s Monetary Policy Committee (MPC) was hanging tough about the healthy outlook for the UK economy and still harbouring thoughts of a UK rate rise coming into focus in the first part of next year.
The RBNZ has just delivered a universally expected 25-point cut to the OCR (to 2.75%) and says both that some further easing seems likely and that further currency deprecation is appropriate. This takes a bite out of pre-RBNZ NZD strength.
Australian's are feeling less anxious underpinned by lower stress associated with retirement funding, cost of living, job security and health. And for the first time, NAB’s Consumer Anxiety report sheds light on spending behaviours across states.
The global financial markets are breathing a sigh of relief and enjoying the advent of Spring here in the Southern Hemisphere. Happy days: the Fed may wait a little while before raising rates and China seems to have everything sorted.
In this Weekly, we are enclosing a recent research piece from our Senior Currency Strategist Emma Lawson on the commodities that are (and which will be) important drivers of the Australian dollar, including the outlook. We also preview local data and RBA speeches for the week ahead.
In the wake Friday’s US employment report that overall could be judged to be consistent with the FOMC’s stated desire to see ‘some further improvement in the labor market’, risk markets took fresh fright.
The Euro is weaker this morning and the USD a touch stronger thanks to ECB President Draghi banging the drum about QE, the ECB staff downgrading their Euro-zone growth and inflation forecasts and a pretty comforting slug of US data.
A more measured night. Shanghai finished down smalls yesterday (-0.2%) ahead of a four day long weekend to mark China’s victory in WWII and while European bourses had something of a see-saw night closed higher.
Things aren’t really getting better. The circular theme of markets continues, with equities weakening, weighing on broader risk, weighing on currencies, weighing on equities. And so it goes. While the Fed waits to decide to raise rates, this is not helping the global markets.
Equity markets harboured something of a defensive tone, but the oil market kicked higher again on the little to no fundamental news, signs of a classic short squeeze.
The RBA Board is sure to leave the cash rate at 2% on Tuesday and their Statement is likely to again signal a very modest easing bias. Absolutely no intent, but nonetheless an acknowledgement that if needed they still have 200bps of interest rates to play with.
European and U.S markets on Friday failed to key off the 4.82% rise in the Shanghai Composite, in contrast to Thursday. The proximity to the weekend Jackson Hole talk-fest looks to have been a factor keeping trading subdued.
In the immortal words of Johnny Cash (singing) “I ‘m going to Jackson…” Nope, can’t do it justice, although Ray (MT’s co-author) is definitely having an influence on me. But we do see the central bankers heading to Jackson Hole (JH)
Difficult huh? You thought you knew which direction this was all going? After big moves there can often be big reversals. It doesn’t mean that the underlying issue is resolved but rather is often a factor of positioning, liquidity and uncertainty. We have a jumble of all three going on.
China did what the market was looking for (on Monday) by easing policy, but it appears that the markets want more. Thanks, but we are not quite happy yet.
Feeding off Monday’s 8.5%plunge in the Shanghai index and not much else, US stock markets have just closed with the S&P500 down 3.92%, the NASDAQ -3.81% and the Dow 3.56%. This masks much more extreme intraday volatility and which saw indices down more than 5% earlier in the US session.
The Economist this week carries a topical article on commodities, “Goodbye to all that: a decade of binging on raw materials may leave an even longer hangover”, outlining the pressure on producers now from declining prices.
Despite the best efforts of policy makers of late to downplay the significance of the first Fed rate rise relative to what happens after that, global markets remain in the midst of rate rise ructions.
It has been a very eventful night, with US equities ending in a (deep) sea of red with the main indices all off over 2%, bond yields lower and the US dollar weaker across the board led by a rally of more than 1% in the Euro.
Inflation is back in vogue, and (in the US) it is being kept lower by a stronger USD and lower commodity prices.
Direction was taken from the weakness in the Chinese equity market yesterday, as the overnight sessions provided little new news of its own.
News wise, it has actually been quite an eventful night – tragically so in Thailand where a bomb blast in the centre of Bangkok during Monday’s evening rush hour is reported to have killed least 19 people and injured more than 120.
Noteworthy developments last week from the RBA, were: (i) the Deputy Governor attribute most of the recent increase in Australian house prices to an increase in land prices; and (ii) Assistant Governor Chris Kent add the composition of recent Australian growth (and possible mismeasurement issues for services growth) to the list of explanations as to why Australian employment and unemployment outcomes had outperformed expectations despite as expected relatively slow GDP growth.
An uneventful end to the week on Friday but one where mild upside surprises in US industrial production and PPI helped deliver slightly higher US treasury yields out to 10 years and a marginally firmer dollar.
Further weakness in oil prices, a more settled Chinese renminbi and a solid US July retail sales report caught the market’s attention overnight. News of disruption to the major Chinese port of Tianjin after the explosion Wednesday has not so far affected the outlook for iron ore prices too much.
It’s getting interesting. And it is likely to remain that way for a little while yet. China’s move to a more market orientated currency is causing volatility and uncertainty and it might take a while until there is clarity.
Markets are a little wary of the implications of China’s devaluation yesterday, combine that with uncertainty around the Fed’s upcoming interest rate hike and mix in Northern Hemisphere summer liquidity and you have a slightly uneasy, conflicting set of market moves overnight.
With just over a month to go until the Sep 18 FOMC meeting announcement, Fed speakers remain right under the spotlight. Last night we heard from two, Denis Lockhart, Atlanta Fed President and voter and Stanley Fischer, no 2 at the Fed each with their own perspective.
This week we attempt to interpret the latest developments in the large and complex range of conflicting influences impacting on the Australian economy and financial markets. It’s fair to say there is something for everyone in the latest data and policy pronouncements.
On Friday the US dollar failed to sustain the gains seen in the immediate aftermath of a US employment report best described as solid but not spectacular. This meant that the AUD finished the week up at 0.7420 having been as low as 0.7260 earlier in the week.
Interest overnight in what the BoE Governor had to say after their meeting and how “hawkish” he might be, focus of course also in their forecasts in the latest quarterly Inflation Report.
Anglo-American pop band Katrina and the Waves - Walking on Sunshine - is 30 years old this year and the rights to the song were sold to Bertelsmann last night for a cool £10mn. The song still generates over £1mn. a year in royalties and endorsements.
Much of yesterday and the overnight sessions were characterised by relatively quiet moves, with bursts of activity.
Oil took centre stage last night with West Texas Intermediate down 3.8% to $45.33/bbl and Brent crude down a cool 5.0% to $49.60, WTI the lowest since March 19 and Brent below $50/bbl for the first time since January when oil selling was at its most intense.
Event risk aplenty this week with the RBA August Board meeting tomorrow, Friday’s RBA Statement on Monetary Policy (SoMP) and key economy reports. Among those data points, the most market sensitive is tomorrow’s retail sales along with a wider trade deficit.
Most of Friday’s market price action emanated from the US Q2 Employment Cost Index, which at just +0.2% Q/Q (not annualised) was the lowest quarterly change since records began in 1996. The market was looking for +0.6% after +0.7% in Q1.
It appears markets have run out of oomph. We have gone back to typical summer markets, where there is a drifting of trends but not a lot to get your teeth into.
Two words, both beginning with ‘so’ - solid and some - marked the FOMC statement out as very subtly more hawkish than its recent predecessors.
Sitting, waiting for the Fed, in summer markets. That pretty much characterises the last day, which was surprising after the angst of the prior period.
Very much a risk-off night for markets with equities and some commodities taking the brunt after Chinese stocks lurched lower in afternoon trade to finish down an eye-glazing 8½% on the day. A year ago, the Shanghai composite was 2,177; yesterday it closed at 3,752.
This week we focus on two important developments from last week. The Governor (and Board’s) conundrum about unemployment rates and the implications for the Australians market.
Price wise, there was not a lot to note in Friday’s offshore markets, much of the day’s price action having occurred during the Asia-Pacific session (in FX at least).
It’s been a night again where the market has not had to be besotted with global geo-politics such as Greece and has been able to focus on the flow of data and more reports out of the US earnings season.
No doubt RBA Governor Stevens would have a wry grin with the partial pull-back in the USD overnight with the AUD/USD the best performer among the majors popping back above 0.74 overnight and where it sits this morning.
In what has been an otherwise quiet night bereft on tier-1 economic news, the highlight has arguably been comment from St Louis Fed president James Bullard.
We suspect little flow on for Australian rate pricing from the RBNZ and BoC moves – central banks are responding to their domestic circumstances, and the Australian economy, so far, continues to perform better than expected.
Friday was pretty quiet, in FX especially, after US CPI data failed to surprise, following a slow Asia session where activity was constrained by end-of-Ramadan holidays in Singapore, Malaysia and Indonesia. Gold was one of the biggest movers on the night, -$11.25 to a new 5-year low of $1134.14
Not big moves on the currency front overnight, though the USD was somewhat stronger as the ECB announced that it had turned on the liquidity spigot for Greece again and what data there was for the US was added a little more incremental evidence the economy is making further progress.
News wise, nothing bad has happened in or to Australia since we went home last night. Yet the AUD sits almost a full cent lower than where we left it.
Back to our day jobs, with a reprieve on being political or equity analysts, we can return to the global economy. Markets also chose to ignore the after-party cleaning up in Greece, to focus on central bank speak – both actual and what is to come.
After a truly marathon effort, the EU leaders and Greece reached a deal in the early hours of Monday morning Europe time. Another bailout, but with no debt haircut.
After a drawn out sequence of EuroGroup, EU Leaders and side meetings through last week, the EU Leaders have been meeting overnight in another drawn out and, at times, acrimonious attempt to put together a deal that would result in a third bailout package and keep Greece in the Euro.
According to the Guardian’s European correspondent, ‘extensive mental waterboarding’ is how one official described the rough ride being given to Greek PM Alex Tsipras by EU President Donald Tusk, German chancellor Merkel and French President Françoise Hollande.
“New Greek proposals received by Europgroup president Jeroen Dijsselbloem, important for institutions to consider these in their assessment”. So tweets Dijsselbloem’s spokesman Michel Reins.
While being glued to the long running soap opera of the Greek debt situation, there is another, more mini-series like, show going on in the East. And like Netflix versus NBC (who shows Days of our Lives) it has crept up and has captured everyone’s attention.
Markets were disappointed by the lack of progress in Greece overnight; albeit they should be used to that by now. It did lead to a big drop in European yields and equity market, EUR also underperformed for much of the day.
Naturally, in the aftermath of the Greece referendum on the bailout producing such a decisive “no” vote to European creditor bailout terms, that was always going to be the main talk across news and wire services overnight.
In this special edition podcast, Peter Jolly, NAB Global Head of Research, and Peter Hartley, NAB Business Markets - Foreign Exchange, discuss the latest developments in the Greece referendum fallout.
This week we look at: the Greek vote; recent developments in Chinese equity markets; the RBA’s July Board meeting; and upcoming important Australian labour market releases for June, with ANZ and SEEK job ads released this week and the monthly ABS labour market data on Thursday.
Ahead of Sunday’s referendum, that is now in process of delivering a decisive ‘No’ vote (to the terms and conditions under which Greece’s creditors would have extended the now-expired second bailout).
An overall disappointing US payrolls report, the ‘lowlight’ of which was an unexpectedly flat monthly read on average hourly earnings and which, together with a 0.1% downward revision to May, served to pull annual earnings growth down to 2.0% from 2.3%.
om Petty’s 1989 classic is appropriately recast as an “Ode to Alex” (Tsipras) after the Greek Prime Minister says he won’t back down on his referendum decision and that both he and Finance Minister Yanis Varoufakis confirmed they are campaigning for a ‘No’ vote in Sunday’s poll.
Greece has officially missed its payment to the IMF, but markets are seemingly unconcerned. We have passed that mattering for now.
We expected this week to be one of fast moving events, and that’s how it’s playing out. Greek PM Alex Tsipras has been speaking saying that he will do whatever he can to protect the Greek people
This week we cover the weekend’s events in Greece and China along with impressions from Asian investors following a two-week trip marketing Australia through Singapore, Hong Kong, Tokyo and China.
Well, we didn’t see that coming, neither did the Institutions (nee Troika), nor the markets. Greece has pulled the negotiations plug at the last minute and put the deal to a national referendum (5 July) AFTER the deadline for payment (1 July).
If you had come in this morning, looked at the news released on the US economy overnight and how the US bond and equity markets had traded, you would not be surprised at all with the prices on the screen this morning, irrespective of what has and has not been going on as far as Greece is concerned.
11 days of 11th hour negotiations: It sure feels like it. It’s still Greek news setting the pace for the market.
All is well, solved, sorted; just not signed. Markets are pretty content with the idea that Greece and its creditors will do a deal before the June 30 deadline. And the Fed will hike in September, and China can avoid an equity market accident.
Except he never came. We wait, there is a vast amount of commentary and expectation, and even a fair degree of optimism. And nothing might happen for a few days at least. But in this case, there will be an endpoint.
Here we are again, still writing about Greece. Will a deal be put together that is acceptable to Greece and its creditors? Greece is asking for debt relief, Europe asking for further economic reforms to pensions and taxation. The 11th hour for Greece is approaching, yet again.
Not much happened Friday amid an absence of US data and with no significant developments - at least not in public view - ahead of Monday’s all-important EU Summit.
A fairly big slug of US economic data last night – admittedly not all of its top drawer – collectively added up to progress, on the real economy at least, towards the commencement of Fed tightening in coming months.
The FOMC meeting was a bit of a mark-to-reality exercise for markets, after perhaps getting a little ahead of itself. This applies both to the intra-day moves and the direction over recent weeks.
There is a nervous tinge to the commentary overnight, but market moves have been relatively light, and the same is expected for today. Equities are modestly higher in the US and Europe, yields are lower generally, while the USD outperformed.
Given the news that greeted the incoming Asia-Pacific market on Monday morning – that talks between Greece and her creditors in Brussels on Sunday had collapsed after just 45 minutes
The market is focussed on the next steps after the breakdown in talks between Greece and its European creditors overnight and Thursday’s Federal Open Market Committee releasing its latest forecasts and views on Thursday morning our time.
After markets last week ended with a whimper rather than a bang, things have already heated up this morning with news on Sunday evening from Brussels that the latest talks aimed at bridging the differences between Greece and her creditors have collapsed.
NAB Global Co-Head of FX Strategy, Ray Attrill shares a market update for the week ending 12 June 2015
It’s been a whippy, but in the event, mostly an up week for the AUD, starting with a better NAB Business Survey for May, disappointing consumer confidence, RBA’s Stevens keeping the rate easing door ajar and yesterday’s strong employment report.
To the evident delight of a section of the offshore hedge fund community, the RBNZ has just delivered on its recently instated easing bias, with a 25-point cut to the OCR to 3.25% and accompanied by a statement that further easing may be appropriate.
NAB Business Survey for May was a positive start to this week’s data set that culminates in Thursday’s Labour Force report for May.
You’d think it was a quiet night overnight: US equities were flat, European stocks a little down and currencies traded in a very tight range.
The first port of call for some Australian market participants this morning, returning to work after a three day weekend and having just caught up on Friday’s all-important US employment report, might be to their IT department to complain the prices on their screens are all wrong.
NAB's Director & Senior Economist, David de Garis shares a market update for the week ending 5 June 2015
As has been touted in recent days, the IMF confirmed that Greece has asked the IMF to bundle its four June payments into one, delaying therefore the €301mn payment due to the Fund tonight
Well if Mr Draghi says it is so, we’d better get used to it. Bond yields, particularly in Germany, continued their rise yesterday; despite the ECB’s Draghi telling us that they are committed to their QE program.
Big moves overnight, not all of them consistent, but they may have caught out investors positioning for a rise in risk aversion. As news of a possible deal between Greece and its creditors came in, bond yields – led by Germany, rose sharply.
Incoming US economic data continues to rule the roost, last night’s batch encompassing the manufacturing ISM (strong), construction spending (very strong) personal income (strong), spending (weak) and the personal consumption deflators (weak).
A big week with Q1 Australian GDP, the RBA’s June Board Meeting and US non-farm payrolls for May at the end of the week. Greece faces a tough three months, with large debt, loan and interest payments due between June and August. In our highlighted article, we focus on different scenarios for Greece and what they mean for the EUR and AUD.
US revised Q1 GDP came in at -0.7% so not quite as weak as the -0.9% expected (and note any upward revision from a review of seasonal adjustment methodology will not arrive until the Q2 estimate is first released in late July).
Greece news and chatter continues to permeate markets as Greece gets closer to the first payment to the IMF due June 5. Reports of continued losses at Greek banks and deposit outflows continues to weigh on sentiment as liquidity remains at a premium.
Something of a risk-on night for equities and bonds with Greek PM Tsipras saying that a solution was “close” seemingly supporting investor sentiment.
Seemingly there were many “light bulb” moments overnight, when competing ideas, that have been around awhile, suddenly gain traction and markets run with them.
Tick tock, tick tock – that’s both the sound of time passing on one of the quietest days in the markets but also that of the countdown to Greece needing to come to an agreement with its creditors.
2015-16 Capex expectations an important element in the investment outlook
If US April core CPI had printed just .007% lower than the 0.256% it actually did, it would have been rounded down to 0.2% on the month not up to 0.3%, and arguably most of Friday's market price action wouldn't have occurred.
The Euro-zone preliminary PMI readings for May hit the screens early in the European session, revealing something of a net recovery for the Euro-zone, the manufacturing index up to 52.3 from 52.0.
It’s the week of central bank meeting minutes. After Tuesday’s RBA Minutes (and Lowe’s speech Monday) reminded the market the absence of a bias in no way restricts their policy options.
The ECB reminded markets that they were still there and still implementing QE. That allowed for a rally in European stocks and led to underperformance by the EUR.
They might not exactly be skipping across Martin Place to work this morning, but there should be at least a small smile on the faces of RBA Board members that the Aussie dollar is trading back on a ‘7’ handle, following a night during which the US dollar had been bid across the board.
This week we look at the 4.9% rise in SEEK new job advertisements recorded in April; and two important aspects of the Australian Budget – the likely impact on confidence; and the continued reliance of the Budget forecasts on a recovery in revenues.
Friday was a case of another day, another set of disappointing US economic release. The latest was a trifecta encompassing industrial production and the Empire Manufacturing survey.
NAB Global Co-Head of FX Strategy, Ray Attrill, shares a market update for the week ending 15 May 2015
After Wednesday night’s excitement, there was a collective deep breath overnight, with some of the preceding moves reversed. There was little newsflow but what there was allowed for some relaxation of the prior day’s anxiety.
Currencies are really where it's at this morning, with the US dollar smartly lower across the board and with losses led by the Aussie and Kiwi dollars.
Lacking fresh data or major events, it’s been a relatively subdued offshore trading session where with a couple of currency exceptions
This week we look at the latest US payrolls data, the Australian Budget and how some of the main monthly economic indicators suggest the transition in the Australian economy from mining investment led growth to non-mining growth is progressing.
The April US employment report proved to be a ‘Goldilocks’ affair for markets, not strong enough to detract from the view a first Fed tightening probably won’t happen at least before September
If you pull an elastic band hard enough, it will snap back and might hurt. It seems we are getting that in yields, but we know that the band runs out of energy at some point.
We are likely in for an interesting debate ahead: Central banks lower policy accommodation to astonishing levels and then suggest that markets might be a touch expensive.
It’s been a very eventful past two sessions for the AUD that sits atop the major FX leader board, trading at 0.7935 in early trade this morning. The reaction of the AUD immediately after the RBA statement said it all.
A night of recent ranges as far as the major currencies was the order of the overnight session, the AUD/USD marking time ahead of the RBA decision today at 2.30pm. As background to the $A, iron ore spot prices pulled back again yesterday by $0.95 to $56.18, gold rose 1.13% and LME copper by 1.0%.
Ahead of next week’s Commonwealth Budget, there has been speculation on whether Australia’s AAA sovereign credit rating is at risk. There are several aspects to consider here. First the likelihood and second the implications.
The US Treasury bond yield back-up continued on Friday, but this time not led by Europe, where the 10yr Bund yield was up just 0.7bp to 0.373% in a holiday thinned European May Day .
Today is a holiday in much of Asia and Europe (Happy May Day) but that doesn’t stop the dataflow.
The FOMC statement issued earlier this morning has made it clear that there is no pre-determined timeline for Fed rate lift-off.
The overnight session was one of US$ weakness and $A strength, trades that gathered momentum early in the London session, a session marked by a big miss on US consumer confidence.
Eurozone markets have been cheered by reports that Greek Finance Minister Yanis Varoufakis has been removed from the debt-deal negotiation table by his prime minister. Varoufakis’ hard-ball tactics have been a source of huge frustration for the Brussels group of international creditors.
Almost without irony, we have to report that Friday’s US durable goods orders report was sufficiently weak to power US stock indices to new record highs, such was the ‘zero for longer’ interpretation of the data. Not the better than expected +4% headline read-out, but the core numbers for capital goods that exclude both (exceptionally strong) Boeing aircraft orders and also relatively strong auto orders.
It was a case of softer than expected readings on both sides of the Atlantic overnight, but in the wash up, the market was inclined to give more credence to the softer suite of US economy reports than for Europe’s.
AUD/NZD parity party celebrations will just have to be put back into the cupboard for now, courtesy of yesterday’s higher than expected AU CPI, headline and underlying inflation higher by up to a tenth.
Watching the horrific wind and rain maps of the Sydney area must have seen many planes circling and hoping to land or simply stuck on the tarmac. Markets were also in a holding pattern overnight.
Glenn Stevens spoke last night, and some of his words clearly resonated in FX market if less so in interest rate markets.
That is a key question for investors seeking to work out whether the RBA will ease again at the May Board meeting and furthermore whether the market is correct in pricing nearly two full interest rate cuts by February 2016
Two big pieces of Australian data this week ahead of next week’s RBA Minutes and the Q1 CPI
NAB Director & Senior Economist, David de Garis, shares a market update for the week ending 2 April 2015
NAB’s Australian economy forecast of 2.9% GDP growth over the course of 2015, picking up to 3.3% growth through 2016 encompasses 11.2% growth in dwelling investment through this year, and 6.9% forecast through 2016.
This week we look at: •The latest US FOMC statement and its implications; •The RBA Minutes, which reveal the Bank considered further reducing rates in March, but decided against moving at that meeting. How much longer might they be patient?; •The latest industry employment data to see how this fits with our view of the Australian economy; and •The main events coming up this week.
We preview this week’s Federal Open Market Committee meeting and look to tomorrow’s RBA March Board Minutes. The focus will be on the Committee’s forward guidance and forecasts, and whether they can still be “patient” before beginning to normalise the stance of monetary policy.
NAB Director & Senior Economist, David de Garis, shares a market update for the week ending 6 March 2015.
Covers the implications of Friday’s stronger-than-expected US non-farm payrolls, previews important Australian Labour Market data and reports on increasing anecdotes that the lower $A is beginning to boost the domestic economy through onshoring.
A huge week is in prospect as markets await the RBA board’s March deliberations on Tuesday with keen interest.
NAB’s Director of Fixed Income, Mark Todd, is joined by Steve Goldman from Kapstream and Adam Goldstein from Skeggs Goldstein to chat about the global economy and key US economic indicators, and how they could affect US Federal Reserve decisions.
NAB’s Director of Fixed Income, Mark Todd, is joined by Steve Goldman from Kapstream and Adam Goldstien from Skeggs Goldstein to discuss how diversifying across asset classes during this time of low yield can still generate decent returns.
The RBA may be right to suggest that a lower AUD would promote more balanced growth, but its claim that the AUD remains overvalued rings hollow.
If there was any take away from last week’s January labour force report it was that a gradual trend rise in Australia’s unemployment rate remains in place. And this is despite some modest increase in the underlying pace of new job creation.
NAB Director & Senior Economist, David de Garis, shares a market update for the week ending 13 February 2015.
The Ukraine and Russia agree overnight on a ceasefire accord to take effect from this Sunday in a marathon meeting in Minsk, Belarus between PM Poroshenko, Putin, Merkel and Hollande.
The week opens with two conflicting pieces of economic news for markets, the strong US payrolls report and weak China trade data. NAB has also revised lower its $A forecasts. Friday’s US non-farm payrolls report for January surprised on the high side.
Another big week coming up, with the RBA’s first Board meeting of the year tomorrow, the much-awaited retail sales reading for December on Thursday, the RBA’s February Statement of Monetary Policy on Friday and US non-farm payrolls data for January on Friday night.
The USD Index is little changed, but yields are marginally lower after the Fed issued a post meeting Statement repeating it can be “patient” in beginning to normalise monetary policy.
The USD stands lower this morning against all G10 currencies, on the back of remarkably weak US durable goods orders. The EUR was a key beneficiary, up as much as 1.6% for the day, before paring those gains to sit at 1.1360.
The US$ ended last week on a strong note and started the week with more momentum, aided by further Euro weakness. The Greek election has come and gone with anti-austerity Syriza Party winning the largest number of seats with its young leader Alexis Tsipras the winner.
Our central expectation going in to the ECB meeting was that President Draghi would try to exceed expectations. He is a past master of this, very skilled at manipulating opinion and then over-delivering
The Bank of Canada is the latest Central Bank to deliver a shock; cutting its main policy rate to 0.75% from 1.0% in a move which none of the 22 analysts surveyed had anticipated.
There’s a clear trend developing in global equity markets where expectations for monetary stimulus in Europe (ex-Switzerland of course!) are driving stocks higher whilst the prospect, or possibility, of Fed tightening combined with worries over corporate earnings are depressing
For the first time in well over a week, almost every currency is trading on the same big figure as it did 24 hours ago; the one exception being EUR/USD but even this is only 60 pips from where it opened Monday morning.
Nothing could be clearer than the current economic and policy divide than between the US and Europe. As the Fed ponders rate lift-off and US consumer sentiment hits its highest level for 11 years, the ECB last week has been putting together a QE plan that will get some sort of approval from Germany.
Weekly market update week ending 16 January 2015
The big news overnight was the completely unexpected Swiss National Bank abandoning its EUR/CHF 1.20 floor it’s been defending since September 2011. As recently as last week, the 1.20 floor was described by SNB President Thomas Jordan as “absolutely central” in light of negative inflation.
There’s been some more significant price action in commodities to report from the past 24 hours. At lunchtime yesterday Asian LME metals prices went into free-fall on the back of no apparent news other than playing catch up to what we’ve seen on oil and maybe even the AUD.
Oil remains the centre of attention though the further dip not of the same cathartic proportions as the night before but enough it seems to continue to dog equity market sentiment, US energy stocks down another 1.2% with WTI and Brent down 0.4% and 0.8% respectively.
Oil prices have again been the stand out story overnight with Brent now clearly below $50/bbl, having tested below $50 last week, and both WTI and Brent down 5-5½% overnight to below $46 for WTI and currently $46.66 for Brent.
As we headed into the US employment reports, equities, bond yields, and the US Dollar were all modestly drifting lower. On the release, the positive headlines of strong payrolls growth and lower initially saw those shoot higher, before more than fully retracing those moves.
Risk appetite has continued to improve, with a promise from the Fed to be “patient” in normalising interest rates stoking equities.
This morning, the Fed tried to have its cake and eat it, too, leaving markets slightly confused, if not in outright pain.
As Steve Lambert, EGM Capital Financing, explains, 2014 was the year that opened up new opportunities for customers - from the new funding model for local government to the higher education sector emerging as a new borrower in the market. We review the year in our magazine.
Another wild night in markets, and it is slightly to surprising to see equities post some decent gains. The Euro Stoxx 50 closed 2.3% higher with energy stocks leading the way, with some investors likely on the hunt for bargains in the still-negative risk environment.
Hard to know where to start this report with extremely whippy and severe movements across asset classes overnight. It was a wild night for all sorts of reasons, not the least being the siege in Sydney’s CBD that was ended in the early hours of this morning with a sad loss of life for some innocent people.
Weekly market update week ending 12 December 2014
Last Friday saw the third annual pre-Xmas interview of the RBA Governor by the Australian Financial Review. The headlines were: "Governor wants an $A at 75cents" and "RBA pushes back on rates cuts".
There was another step lower in oil prices on Friday night with Brent down another $1.69/bbl to $61.09 and WTI $-2.14 to $57.81. No surprise then that US consumers are rejoicing at the prospect of lower gasoline prices.
e week commences against the backdrop of Friday’s stronger-than-expected US non-farm payrolls report for November (which included favourable diffusion indexes and temp help trends signalling ongoing stronger outcomes).
NAB financial markets report week ending 5th December 2014
Weekly financial markets video week ending 28th November 2014
Australian markets weekly starting 24th November 2014
Weekly financial markets updated week ending 21st November 2014
NAB’s Director of Fixed Income, Mark Todd, asks John Moore from Northward Capital to explain what to look out for when searching for a fund manager.
NAB’s Director of Fixed Income, Mark Todd, is joined by Ken Hyman (Antares) and Francesco De Stradis (Ord Minnett), to consider whether the market will see 'herd instincts' kick in when investors exit the carry trade.
After several low quarterly increases, we expect Wednesday’s Q3 wage data to show a small up-tick in the annual growth rate from 2.6% yoy to 2.7% in Q3.
Financial markets weekly video update week ending 7th November 2014
The US payrolls report on Friday night was solid, despite the headline increase of 214K in October coming in below the 235K expected. September payrolls were revised up by 8k to 256k and August up by 23k to 203k.
Fairly quiet week for scheduled data and events in Australia but more action overseas, particularly in the US where the Federal Reserve will end their bond buying or quantitative easing programme
Financial Markets video update week ending 24th October 2014
Credit growth to rise 0.4% in September, with the focus on investor housing. Q3 trade prices to show a further large fall in export prices..
Q3 CPI to be low. Underlying CPI forecast to rise 0.5% and headline flat. RBA Minutes, Stevens speech and NAB Quarterly Business Survey also next week
Director, Corporate Debt Markets Origination at NAB, Brad Scott discusses the recent developments in the Market Term Notes (MTN) market, along with the outlook for the rest of the year and the opportunities that are opening up for investors.
Weekly Financial Markets Video update
A striking feature in recent times has been the divergence between the confidence of businesses and consumers.
NAB Business Confidence and W-MI Consumer Sentiment, NAB Resi Property Survey; RBA’s Debelle speaks twice
Some quite explosive overnight price action and which has followed directly from the publication of the September FOMC meeting minutes. This has seen US equities jump by almost a percent.
A weekly outlook for Australia, key global economies and markets
What to watch, week commencing 6 October
House prices have been rising briskly in Australia since late 2011. They continued to do so at the weekend with RP Data showing that prices were up in nearly all the major cities and auction clearance rates robust.
The juxtaposition of another significant downside Eurozone data surprise (German IFO) and a major upside surprise for US New Home Sales has – unsurprisingly – pushed the EUR below 1.28 against the US dollar for the first time since 10 July 2013.
In their most recent quarterly RBA Bulletin released last week, the RBA published a summary of their business liaison program, how they use that to stay abreast of current business conditions and how it has been invaluable in providing warnings of any sudden changes in the business cycle.
The USD strengthened against all G10 currencies on Friday night, pushing the AUD to a new post-March low of 0.8921, and it has opened up just above that at 0.8935 this morning. The AUD was not helped by a further 1.6% fall in iron ore.
Financial Stability Review, RBA Governor a panellist at the Melbourne Economic Forum and second tier labour market data. Election tomorrow and Trade data next week.
Business confidence near multi-year highs yet consumer confidence near multi-year lows. Firms profitability being driven by productivity and constrained labour costs. Household income growth near zero over past two years – near recessionary levels.
NAB’s Director of Fixed Income, Mark Todd, discusses the economic outlook for Europe with Grant Eshuys (Citibank) and Mark Bayley (Aquasia), and together they explore the challenges the European nations are facing.
The Government Statistician released the Q2 National Accounts last week which showed the economy doing quite well. Or at least a bit better than we feared given mining investment is slumping and commodity prices are falling.
Australia: Solid employment gain expected on Thursday. NAB Business Survey and Consumer Confidence also released next week. NZ: RBNZ to temper its OCR outlook in Thursday’s Monetary Policy Statement. China: Trade figures, CPI and industrial production.
Australian retail sales rose 0.4% in July, a good result that builds on the 0.6% growth in June. We were expecting a stronger gain but it nevertheless reaffirms that the negative impact from the Federal Budget on retail spending in May was temporary.
RBA Governor Stevens today spoke at a CEDA luncheon in Adelaide. The Governor's speech reinforced expectations that the RBA will remain on hold for some time yet.
After (unrevised) growth of 1.1% in the March quarter, growth of 0.5% in Q2 with the known 0.9% drag from net exports was a more than respectable outcome. Headline growth was a tad above the 0.4% consensus and our own 0.2% call.
For the 13th consecutive month the RBA has kept the cash rate unchanged at 2.50%. They are still on a neutral bias, and there was no meaningful change to the overall tone of the Statement.
It was particularly quiet overnight, with the US on holidays. The poor European and UK data didn’t worry markets much, which, in the main, were taking a little nap
Blockbuster week in Australia with loads of key economic data, an RBA rate decision tomorrow, and a speech from the RBA Governor on Wednesday.
RBA on hold Tuesday, Stevens speaking and a soft GDP report Wednesday, along with mixed July data: strong retail sales but soft building approvals. Pre-Q2 GDP partials also due Mon/Tues; NAB Online retail index due Wednesday
As part of the current local reporting season last week, we heard that both the Gladstone and Australia Pacific LNG projects are on track and on budget.
What to Watch: Week commencing 25 August 2014
The RBA’s half-yearly testimony had a somewhat more positive tone without going overboard on growth specifics nor on when a more discernible upturn might arrive. (The Bank’s formal forecasts were of course outlined in their quarterly statement earlier).
Speaking with clients in Adelaide last week, it was something of a surprise that the NAB Business Survey improved further in July, with NAB Business Conditions making some further ground to now be above its long term average.
Key economic insights from this week and the week ahead
A final word on the Australia-US labour market comparison we wrote about last week. We would not have been surprised to see the US rate lower than Australia’s rate by now before seeing July’s US non-farm payrolls and Australia’s Labour Force report as they had almost converged
What to Watch, week commencing 11 August 2014
Unemployment rate rises to 6.4% in July from 6.0% in June after changes to unemployment definition
The Reserve Bank of Australia made no change to policy at today’s meeting, as expected. There were minimal changes to the press release, and the RBA again concluded that “on present indications, the most prudent course is likely to be a period of stability in interest rates.”
Australia: Building approvals, private sector credit and trade prices highlight the week
The quarterly inflation print is the most important statistic for financial markets in Australia. Several reasons why. First and most importantly the RBA is an inflation targeting central bank and this is their quarterly scorecard.
After seven years of negotiation Australia and Japan signed an Economic Partnership Agreement last week. Some call it a free-trade agreement but as one of my colleagues noted no trade is entirely free.
Key events in Australia, New Zealand and China. What to Watch, week commencing 14 July
NAB’s Director of Fixed Income, Mark Todd, is joined by NAB Head of Research Peter Jolly and Laminar economist Stephen Roberts to discuss the Australian and US economies, along with the Australian Federal Budget and issues posed by our ageing population.
Most of us like matters to be resolved quickly and with clarity. This is especially true of financial market folk: Is the economic outlook good or bad? If the RBA isn’t cutting they must be hiking?
There are some more meaty reports due on the economy this week, commencing with the ANZ Job Ads report for June (L: -5.6%), a last partial look into labour demand ahead of Thursday’s labour force report.
Predictably the RBA left the cash rate unchanged at 2.50%. They also retained their neutral bias – a small surprise – saying again that “the most prudent course is likely to be a period of stability in interest rates”.
NAB’s Director of Fixed Income, Mark Todd, chats about where interest rates are headed and their subsequent impact on term deposits with AFR columnist, Chris Joye and Montgomery Investment Management strategist, Andrew Macken.
NAB’s Director of Fixed Income, Mark Todd, discusses the 2014-15 outlook for the US Federal reserve and interest rates with AFR columnist, Chris Joye and Montgomery Investment Management stategist, Andrew Macken.
A busy few weeks as we get a good number of timely indicators on the economy as well as the RBA’s latest assessment of developments at tomorrow’s Board meeting. Governor Stevens speaks on Thursday.
Key events in Australia, New Zealand and China. What to Watch, week commencing 30 June
A light period for new data is an appropriate time to take stock of where the economy is at. Short answer is that the pace appears to be coming out of the interest rate sensitive consumer
Key events in Australia, New Zealand and China/India. What to Watch, week commencing 23 June
Key events in Australia, New Zealand and China/India. What to Watch, week commencing 16 June
NAB’s Director of Fixed Income, Mark Todd, outlines the concept of market volatility, absorbing volatility and what it means for self-managed super funds.
NAB’s Director of Fixed Income, Mark Todd is joined by Sue Wang from Mercer to explain the 'My Super' reforms and how changing your superannuation investment strategy as you age can make a big difference on your retirement.
NAB’s Director of Fixed Income, Mark Todd, talks with two analysts about what they look for apart from growth when analysing a company - including finance risk, business risk, management history, assets, gearing, mix of debt and equity.
NAB’s Director of Fixed Income, Mark Todd, discusses the issues and strategies around setting up a self-managed super fund (SMSF) with Sue Wang from Mercer and Chris Black from the Laminar Group.
NAB’s Director of Fixed Income, Mark Todd, is joined by FNArena analyst Rudi Filapek-Vandyck. They begin by discussing investing in BHP stock, before assessing inflation - including current forecasts and how velocity, innovation and the labour market can impact upon it.
NAB’s Director of Fixed Income, Mark Todd, discusses the current trends in mining stocks and why they've become attractive to dividend hunters with FNArena analyst Rudi Filapek-Vandyck.
NAB’s Director of Fixed Income, Mark Todd, chats with Steve Lambert, Executive General Manager of Capital Markets at NAB about the evolution of the Corporate Bond Market, why it's important and how it relates to the individual investor.
As expected, the RBA left the cash rate unchanged at 3.00% yesterday, also retaining their monetary easing bias, or in their words, “the inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary to support demand”.
We bring you the first of five research reports examining the Australian Corporate Bond Market, prepared for National Australia Bank by the Australian Centre for Financial Studies.
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