Bond markets have been supported by some market-friendly data and while Fed speakers were again mixed, it was the more dovish remarks that captured attention.
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Taylor Nugent
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Markets Today – Proceed Carefully
The FOMC Minutes out 6am Sydney time didn’t do much to excite markets. The euro is a little weaker over the past 24 hours, while the equity market rally has lost some steam.
Markets Today – When it rains it pours
It was a busy 24 hours for data flow globally. Yields partially retraced yesterday’s post-CPI bond rally, while equities have held onto gains.
Markets Today – Slow
US CPI came in a tenth below consensus on both the headline and core rates, leaving yields sharply lower, the USD weaker, and equities higher.
Markets Today – When the Night Falls Quiet
It was a quiet start to the week for news flow, which was mostly reflected in market movements, though yields are generally higher.
Markets Today – On Hold
The FOMC was on hold as expected. Yields are lower, though most of the moves came ahead of the Fed with soft US data.
Markets Today – Shake It Off (Taylor’s Version)
Risk sentiment started the week on firmer footing. Equities are higher, the US dollar is lower, and US yields were higher. Brent oil lost 3%, back below $88 a barrel.
Markets Today – European Disappointment
Weaker European PMIs, and potentially some unwind of yesterday’s move, have seen a stronger US dollar the main mover overnight, up 0.7% on the DXY.
Markets Today – Carefully
Fed Chair Powell’s remarks have seen a choppy market response and a steeper curve, but against a backdrop of weak risk sentiment
Markets Today – Winter is Hopeful
Todays podcast Positive risk appetite to kick off the new week Equities higher, S&P500 +1.1% Yields higher, US 10yr +9bp to 4.70% Dollar loses 0.4% on the DXY with AUD an outperformer, +0.8% to 0.6344 Coming up: NZ CPI, RBA Minutes, US Retail, CA CPI, UK Wages, FED & ECB speakers Events round-up NZ: Performance […]
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Markets Today – Work It
Stronger than expected payrolls data initially saw yields sharply higher, equities lower, and the USD stronger, though with the unemployment rate steady and earnings growth moderating, those moves were retraced.
Markets Today – Breathe
The bond sell-off that dominated the early part of the week has been put on pause. Why? NAB’s Taylor Nugent says there are a number of factors, but it’s tomorrow’s non-farm payrolls that will really set the direction for early next week.
Markets Today – One More Day
Bond markets are a little feisty ahead of the FOMC meeting tomorrow. NAB’s Taylor Nugent says a hold is still expected tomorrow but there are more signs that inflation isn’t beaten yet.
Markets Today – As high as it gets?
Todays podcast ECB opts to hike, but taken as dovish with guidance read as a peak in rates Euro -0.8% and European yields are lower US Retail Sales data stronger in August, though offset by revisions AU Employment bounced in August Coming up: China Activity & MLF rate, NZ Manufacturing PMI, US UMich confidence […]
Markets Today – Nothing Gonna Break my Stride
US equities manage a marginal gain on Friday, but lower over the week and yields edge higher.
Markets Today – Slow Ride
Yields are generally lower globally after a boost to US 2-year yields from lower jobless claims proved short-lived while equities declined.
AMW – Labour Markets – Progress on rebalancing labour markets in the US and Australia
In this Weekly, we take stock of progress rebalancing labour markets in the US and Australia, finding significant progress has been made on a range of indicators even without a sizeable lift in unemployment rates
Markets Today – Constant Repeat
A softer Caixin Services PMI soured the mood yesterday, with the USD broadly stronger and the AUD the worst G10 performer
Markets Today – Cooling of the Embers
Softer US consumer confidence and a JOLTs report suggesting ongoing rebalancing in the labour market saw the US dollar and US yields lower, while equities were higher.
Markets Today – Falling
Yields were generally lower globally as PMI data came in softer than expectations, with deterioration most pronounced in German Services. The AUD was stronger, as were US equities, with tech leading once again ahead of much anticipated earnings from Nvidia.
Markets Today – Back to the Grind
US yields resumed their grind higher to start the new week, though there was little news to speak of, while US equities where higher.
Markets Today – Still Watching, Still Worried
Todays podcast FOMC Minutes show concern about upside risks to inflation US yields higher led by 5bp rise in 10yr Equities were lower, S&P500 -0.8% with declines late in the session Asia equities weighed by China concerns AUD -0.5% against a broadly stronger dollar at 0.6421 Coming up: AU Employment, NZ PPI, JN Machinery Orders, […]
AMW – US Inflation – Encouraging, but don’t extrapolate blindly to Australia
Recent US CPI prints have shown good progress on disinflation. In this Weekly, we look at where those gains have occurred, and what to be careful of when drawing implications for Australia
Markets Today – Sour Candy
Risk appetite has been weighed over the past 24 hours by a trio of soft China data, a surprise ‘windfall’ tax on bank profits in Italy, and a downgrade of a number of small and mid-sized banks by Moody’s.
AMW – Q2 CPI Preview – Slow progress in Q2 inflation
We expect Q2 CPI next Wednesday (26 July) to show little sequential progress reducing underlying inflation even as y/y rates move lower
Markets Today – Slower but far from slow
Payrolls failed to deliver the upside surprise feared following strong data earlier in the week, seeing some pullback in the USD and short-end yields on Friday.
Markets Today – Maybe Next Time
The RBA met yesterday and held rates steady. Other than that, it was a very quiet 24 hours characterised by thin trading alongside the US 4 July holiday.
Markets Today – PMI Slowdown
PMIs on Friday showed Eurozone output growth close to stalling, seeing Europe lead yields lower and the euro fall.
Markets Today – No relief
Powell added little new information in House testimony, but the US dollar was weaker and equities were lower. UK CPI data surprised higher ahead of the BoE later today
AMW – Making sense of the RBA’s productivity focus
In today’s Weekly, we delve into Australia’s productivity and labour cost data given the RBA’s recent focus on these metrics, and explain why timely signals on the inflation outlook may be better found elsewhere.
Markets Today – Soft enough to skip?
US CPI was in line with expectations, adding to confidence the FOMC will skip at tomorrow’s meeting even as yields pushed higher. Strong UK labour market saw UK yields surge.
AMW – Why rents are going up and when they will stop
In our latest Weekly, Taylor Nugent explores the impact of pandemic swings in population and housing demand to explain the current acute rental market tightness and rapidly increasing rents, as well as when these pressure may ease
Markets Today – Consequences
It has been a quiet 24 hours in markets with generally small market movements, while the Australian dollar held onto its gains following yesterday RBA rate hike, 0.8% higher against the US dollar.
Markets Today – Now That I Found You
US equities were higher on Friday as hopes grew of a debt ceiling deal, ahead of news on the weekend that an agreement in principle had indeed been found. US data was strong and Fed tightening expectations firmed.
Markets Today – Diamond in the rough
The US dollar extended its positive streak and yields globally were higher despite mixed economic data as AI-related tech saw US equites higher
Markets Today – Tug of War
The absence of a debt ceiling deal weighs on risk sentiment even as Biden calls talks ‘productive,’ while global PMIs reaffirm the stark divergence between services and goods.
AMW – Room for optimism, but wages may not be as benign as they seem
In this Weekly, we delve into last week’s WPI data in more detail and discuss the risks to wages projections and the RBA's outlook
Markets Today – Far Away
A flurry of global economic data but relatively modest market movements.
Markets Today – Tough Medicine
The Bank of England raised rates by 25bp as expected, while softer data out of China and the US weighed on risk sentiment
Markets Today – Could this be enough?
US yields were lower and the dollar stronger with the FOMC increasing rates by 25bp as expected and dropping the expectation for further hikes.
Markets Today – Resolution
US yields are higher and the dollar stronger with little fallout from the failure of First Republic, being acquired by JP Morgan in an FDIC-supported deal.
Markets Today – Where’s North from Here?
Softer US growth but stubbornly sticky prices has seen US yields higher, while US equities recorded their biggest gain since January.
AMW – Q1 CPI Preview – Past the peak, but still too high
We expect CPI on Wednesday to confirm that inflation is past its peak in Q1 but remains well above the RBA’s target. In this Weekly, we outline our detailed forecasts.
Markets Today – Is it really so bad?
Stronger than expected US data pushed US yields higher and supported a broadly stronger US dollar on Friday.
Markets Today – Good, but good enough?
US treasuries retraced most of their post-CPI rally overnight with core CPI coming in as expected.
AMW – The RBA Pauses Early – what are the risks?
The RBA opted to pause rate increases last week, sooner and at a lower level than many of their central banking peers. In this Weekly, we look at the risks in their approach.
Markets Today – Could this be the slowing we’ve been waiting for?
Softer US data saw recession concerns to the fore, with yields lower over the day but some safe-haven dynamics supporting the USD.
AMW – An update on the RBA review
Late on Friday, the Treasurer formally received the independent review into the RBA, which has 51 recommendations.
Markets Today – What’s old is new again
It’s a third successive day of relative calm across markets, though an upside surprise to German CPI has seen European yields push higher.
Markets Today – Relative Calm
There has been little top-level news flow over the past 24 hours, which has seen markets relatively calm by the standards of recent weeks.
AMW: Financial Conditions and implications for the Fed, RBA
This week, we update financial condition indices for Australia and the US and outline how central banks are likely to navigate financial stability and price stability priorities.
Markets Today – So Yesterday
It was another fairly volatile day following the weekend deal for UBS to buy Credit Suisse, though overall the deal seems to have found some cautious acceptance.
Markets Today – Are we out of the woods yet?
Bond yields rose sharply on the developing assessment of turmoil in US banking, helped by but largely overshadowing a stubbornly strong US CPI.
Markets Today: Hawkish Holzmann
Hawkish comments from ECB’s Holzmann send European yields higher in an otherwise quiet night for news flow
Markets Today: I won’t back down
Upside surprises to European inflation out of Spain and France have seen ECB pricing and European yields push higher, with some bleed through into the US. Elsewhere, US equities are little changed, shrugging off soft consumer confidence data, but are and on track for a monthly decline of more than 2%.
Markets Today: Wages Day
In Australia yesterday, WPI wages data showed less wages pressure than feared. WPI grew 0.8% q/q and 3.3% y/y, 0.2ppts below the market consensus and RBA expectations.
AMW: Could higher wages push the RBA even further?
Yesterday's Minutes make clear the RBA’s priority is inflation. While the Board is seeking to return inflation to target while keeping the economy on an ‘even keel’ it will do what is necessary to return inflation to target. The wages backdrop is a key risk.
Markets Today: US back to work for PMI day
President Biden visited Ukraine, where he pledged ‘unwavering support’ for the country as the Russia’s invasion nears the one-year mark.
MT: Resilient inflation pushes yields higher and sends stocks in a spin
As for the data itself, US CPI was ever so slightly above consensus.
Markets Today: Canada’s turn to surprise on jobs
Headlines of impending Ueda nomination for BoJ Governor see volatile yen..
AMW: RBA to hold nerve on soft landing despite higher underlying CPI and wages
We expect the forecasts to continue to draw a path to a soft landing, but the characterisation of the risks will be key to determine whether the RBA continues to be confident that it can return inflation to target without pushing rates deep into restrictive territory.
Markets Today: ECB still faces inflation and output challenges
Market pricing for ECB meetings increased, helping European yields higher across the curve.
Markets Today: US stocks hit by reality check, Aussie CPI today
European and US PMIs were the main data flow overnight.
AMW: Q4 CPI Preview: Inflation to peak in Q4
CPI inflation is expected to have peaked in Q4 2022. Looking forward, we expected inflation to slow through 2023.
Markets Today: Quietly confident
US equities managed to claw back into the green on Friday to extend the strong start to the year.
MT: Christmas comes early with cooler US inflation
CPI comes in cool at 0.1% m/m and 7.1% y/y, two tenths below consensus
Markets Today: Bouncebackability
The Bank of Canada rose 50bps, the sixth consecutive increase, and took the target rate to 4.25%.
MT: No surprises from RBA but BoC on a knife-edge
The RBA increased interest rates by 25bp to 3.1% and continues to guide that “the Board expects to increase interest rates further over the period ahead".
Markets Today: The Central Bank Dilemma – is it working?
The dollar was softer and US yields lower over the past week as markets both pared terminal rate pricing and priced in more cuts from mid 2023.
Markets Today: Powell slightly less than very hawkish
Markets were relatively muted ahead of Powell’s remarks with US yields and the Dollar were tracking a little higher and equities a little weaker.
Markets Today: Big Trouble in Zero-COVID China
China protests and COVID have seen a tone of caution to start the new week.
AMW: The Q3 WPI will make the RBA nervous
In this Weekly, we dive into last week’s Q3 WPI to explain why the RBA should be more nervous about their strategy and why a near-term pause is unlikely.
Markets Today: Tighter than ever
US yields are higher and the dollar stronger in a modest and reversal of some of last week’s post CPI moves as Fed speakers remain stubborn that rates will continue to go higher to get to a level that is sufficiently restrictive.
MT: Back to betting on the Fed; no pause for RBA?
Fed speakers were clear that a pause is not imminent and there is more to do, even as they may move at a slower pace, while stronger US retail sales numbers showed resilience in spending, providing some small counter to the burst of optimism after softer-than-expected US inflation data last week.
AMW: Is the RBA as dovish as they sound?
In this Weekly, we explore recent RBA communications and forecasts and what it means for the path forward. It is clear there is a very high bar to step back up to 50bp hikes.
Markets Today: An end to China’s Zero COVID, or not?
Speculation about China reopening continues to add some market volatility with WSJ reporting Chinese leaders were considering reopening steps getting some notice.
Markets Today: Cries of ‘Pivot!’ as BoC slows hikes
Yields are generally lower globally as the earlier run up in expectations for central bank tightening are pared a little further. A hike of ‘only’ 50bp from the BoC helping that sentiment.
Markets Today: US rally, China’s slump, UK’s new PM
The UK has a new PM in Rishi Sunak, and gilts have rallied in response. UK 10yr gilt yields were 31bp lower at 3.75%. That’s 90bp off their peak of 4.64%, but still about 60bp above their level before the Truss Premiership.
Markets Today: Full reversal, for today
Yields rose to fresh cycle highs and risk appetite soured. US equities were lower, halting a 2-day rally despite relatively upbeat earnings from the likes of Netflix and United Airlines.
AMW: CPI Preview: Q3 CPI seen +1.6% q/q on trimmed mean and 1.3% on headline
Q3 CPI is on Wednesday 26 October and we forecast Headline of 1.3% q/q and 6.7% y/y.
Markets Today: Don’t panic Mr. Bailey
Bailey in Washington says bond purchases will end as scheduled on Friday
AMW: Preliminary Q3 CPI thoughts and the inflation outlook
In this weekly we give our initial thoughts on Q3 CPI following last week’s August monthly CPI indicator. We will provide a full preview early next week ahead of Q3 CPI on 26 October.
Markets Today: No slowdown yet: Euro inflation and US core PCE
US equites fall on Friday to close out a 3rd consecutive negative quarter
AMW: Where have all the workers gone: Australia?
We explore in detail three features of the post-pandemic labour market that have added frictions and disrupted the supply of labour over and above the shifting macro environment.
MT: US dollar and bond yields continue to rise, till when?
UK rates continue to push higher
Markets Today: Unruly Britannia
Fallout from UK mini-budget continues.
MT: Fed to push higher, Putin pushing for referendums
A sourer tone took hold over the past 24 hours, with equities lower and haven currencies, including the dollar, stronger.
Markets Today: Fears the Fed will ‘keep at it’ for a while yet
US yields continued to push higher ahead of the FOMC
Markets Today: Peering into Jackson hole
Another day spent in anticipation of Powell’s speech tonight
AMW: Wages to accelerate despite gradual lift in WPI
In this weekly, we explain why other wage indicators are lifting more strongly, including from NAB’s own business survey.
Markets Today: UK’s sticker shock inflation drives caution
In Australia, wages data for the 3 months to May disappointed most forecasters, though the result was in line with the RBA August SoMP (and NAB) forecast.
Markets Today: Not convinced by the Fed
The San Francisco Fed’s Mary Daly warned it is too early to ‘declare victory’ over inflation.
AMW: Outlook for wages with unemployment at 3.5%
Our analysis in this weekly highlights that the RBA is indeed treading a fine line in trying to chart a credible path to at target inflation.
MT: No inflation slowdown, just wishful thinking
US economic data on Friday underscored the inflation challenge facing the Fed
Markets Today: Fed hikes 75bp, no forward guidance
The Fed delivered a unanimous 75bp hike as widely anticipated.
AMW: RBA Review, No need to shift inflation target
The Terms of Reference for the RBA Review have been finalised, the three-member review panel appointed, and March 2023 set as a deadline for a final report containing recommendations to the Government. In this Weekly, we look at what to expect.
Markets Today: Aussies Take Up Jobs as Draghi Tries to Quit
Australian employment data yesterday was showed a tighter labour market than the RBA had been expecting with the unemployment rate plummeting four tenths to 3.5% , a new 48-year low.
MT: Oil Dives, Bonds Rally and Recession Fears grow
Brent oil prices are down 17% since 14 June and have the potential to drive some welcome relief on headline inflation prints.
Markets Today: Less US confidence, tough talking ECB
Weaker US consumer confidence dents equities
Markets Today: Unconditional commitment, come what may
Despite softer PMIs and still-hawkish messaging from the Fed, US equities managed to turn around intraday.
AMW: Headline CPI of 7% over 2022 looks reasonable
The RBA has upgraded its inflation forecasts, now seeing headline inflation at 7% by the end of 2022.
Markets Today: Brighter days ahead
Some relief in equities with a strong bounce back from last week’s decline
Markets Today: Markets go cuckoo as the Swiss clock a half percent hike
The Bank of England rose rate by 25bps and left its options wide open on future moves
Markets Today: Get ready for RBA, ECB and US CPI
Markets took the strong US payroll gains on Friday as affirming the near-term path for continued Fed tightening.
AMW: RBA Review to begin ‘relatively soon.’ What to expect
A review into the RBA is expected to occur “relatively soon” according to the newly elected Labor Government.
Markets Today: EU sanctions, more in the pipeline?
Inflation is back in focus with European inflation at its highest ever level of 8.1% y/y helping rates extend yesterday’s selloff.
AMW: There’s more to normalisation than short rates, financial conditions matter
In this Weekly. we discuss how broader financial conditions, and not just the cash rate, are influencing the economic outlook.
Markets Today: Hope springs eternal, well, for today anyway
A more positive risk backdrop begins the new week. US equities are higher, the S&P500 up 1.9%, extending a turnaround after dipping into bear market territory intraday on Friday.
Markets Today: Who can slow down the slowdown?
Although employment growth disappointed yesterday, and along with wages data from earlier in the week, remains consistent with a rate rise of 25bp by the RBA in June.
Markets Today: A world of worry
Risk assets remained out of favour as concerns over inflation and recession risk continued to dominate.
Markets Today: Stocks dive over fears of the perfect storm
The ongoing theme of mounting growth concerns against a backdrop of central bank tightening is continuing to drive market movements.
Markets Today: Market whiplash as sentiment takes a hit
Inflation is now forecast to peak at over 10% this year in the UK
Markets Today: RBA loses a little patience
The RBA yesterday increased the cash rate target by 25bp to 0.35% and said it will do what is necessary to return inflation to the band
Markets Today: Front end Fed and China’s quest for the impossible
There’s been a strong risk-off sentiment to the start of the week.
AMW: The labour market and the outlook for wages
Wages likely to pick up despite NAIRU uncertainty. The RBA’s latest ‘best guess’ of the NAIRU is 4%.
Markets Today: A temporary change in direction
Bond yields have fallen sharply overnight, but that doesn’t mean inflation expectations are going away, or does it?
Markets Today: A very slight glimmer of hope on inflation
US inflation rose as expected, but there’s still been a reaction in the bond markets.
Markets Today: Consumers still spending despite all the hike talk
The reaction to the Fed minutes early yesterday morning continued to dominate markets overnight.
Markets Today: No patience left at RBA
RBA’s April meeting yesterday left policy on hold at 0.1% but underwent a substantial rewrite to the post meeting statement.
Markets Today: Biden dips into reserves, Putin demands Roubles from today
The main news overnight is the US decision to release 1m barrels a day for 6 months from their strategic petroleum reserve
AMW: CPI Preview – Core inflation to surge further, pressuring the RBA
NAB’s view is the RBA will start to hike by August 2022, depending on whether the RBA pivots to a forward-looking approach to policy.
Markets Today: Getting ready to Ruble
Russia intends to make ‘unfriendly’ countries pay for gas in rubles.
Markets Today: A far from transitory Fed
US Fed lifts cash rate 25bps, as expected
AMW: WPI Preview and what does sustainably higher inflation mean?
The Q3 result showed WPI wage increases broadly back to pre-pandemic patterns, and our forecast for Q4 sees an acceleration in private sector wages growth to 2.5% y/y.
AMW: What does low unemployment mean for RBA wages growth forecasts?
In this report we explore the implications of last week's labour market data on the RBA wages outlook ahead of the RBA February Board Meeting and SoMP.
AMW: How high could inflation go? Quantifying goods upside risks for Q4 and Q1
NAB expects that the RBA will raise rates from mid-2023 with a relatively aggressive series of hikes thereafter.
AMW: Wages growth back to pre-pandemic, RBA’s reaction function not clear
The RBA’s wish of achieving wages growth at 3% plus is well known, however the reaction function is not as clear
AMW: Inflation print was real, RBA will need to revise up its track
NAB recently brought forward its view of the first cash rate hike to mid-2023 with a relatively aggressive series of hikes thereafter to bring the cash rate to 1.75-2.00% by end 2024.
AMW: Factors influencing Australian inflation
In this Weekly, we look at some of the key risks around the Australian inflation outlook in the context of measured inflation turning higher globally.
AMW: How should central banks respond to transitory inflation?
We are unlikely to get a true read of the underlying pace of inflation until mid-2022, with both transitory and policy driven impacts continuing to play out.
AMW: Population growth slows in the pandemic; implications for real rates
For Australia, population growth should begin to recover when international borders are re-opened (latest guidance is from mid 2022).
AMW: Australia’s path to reopening in international context
The NSW and Victorian outbreaks remain stubbornly high in the face of strict lockdown measures, renewing focus on vaccinations as the path forward. The vaccination rollout is finding its gear, led by a sharp acceleration in NSW, putting the rollout on track to meet reopening thresholds by November.
AMW: RBA’s SoMP sees markets bring forward RBA pricing again
Strong US Payrolls print, cementing expectations of a taper announcement at an upcoming FOMC meeting (September, November or December). As tapering becomes more certain, market focus will quickly change to the likely rate hike profile. Recent speeches by Fed Vice-Chair Clarida and Governor Brainard hint how this will evolve.
AMW: Vaccinations and the path out of the pandemic
The Sydney lockdown is in its fifth week and looks set to be extended well beyond July 30. Given the high transmission rates of the delta variant, snap lockdowns are likely to remain a ‘tool of first resort’ in controlling the virus until vaccination rates lift.
AMW: What to look out for in Australian inflation
Q2 CPI is just under four weeks away (on Wednesday July 28). In this week’s Weekly we have a first look at what CPI may print and highlight why we believe Core CPI is likely to remain subdued despite the pick-up seen in core inflation in the US, NZ and Canada.
AMW: Terms of Trade & AUD
Things were better in the old days