Markets winding back rate cut expectations
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Markets winding back rate cut expectations
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China confirms an unchanged growth target for 2024 but headwinds will make it much harder to reach
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NAB’s Non-rural Commodity Price Index is expected to ease in Q1 2024
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Commercial property sentiment improved in Q4 but remained weak and below average
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Rate cuts expected in 2024 but inflation path remains uncertain
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The breadth of interest from investors across the Asia Pacific region and ease of access is helping drive a strong pipeline in the Australian Medium-Term Note (AMTN) market as New Zealand borrowers head into 2024.
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A tailored trade and working capital solution developed by NAB in collaboration with broker Max Wang has given pet care company Australia Talentail the confidence to expand into Asia Pacific markets.
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Weaker global growth in 2024 to drive modest commodity demand
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China beat its modest growth target in 2023, but this will be harder to achieve in 2024
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There was a wide divergence in growth among major advanced economies in Q3 – with strength in the US in contrast to relative weakness in other countries. For Australia, recent data have confirmed that the economy is growing at a well-below trend pace, inflation pressure is continuing to moderate and the labour market has remained healthy.
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Weaker inflation boosts rate cut hopes
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China likely to hit its growth target this year, but next year looks more challenging
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The AUD in November AUD/USD returned to ‘normal’ levels of monthly volatility in November.
After what has been a solid month for equities and bond investors, month end flows have probably play their part in the price action overnight, US equities have lost momentum, UST have led a rise in core global bond yields and the USD is stronger. US and European inflation releases favoured the notion the Fed and ECB are done with their respective tightening cycles.
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.
Fed's Waller inches open the US rate cut door
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US and European markets have begun the new week a subdued mood. But core global bond yields are showing some life, lower across the board while the USD is a tad softer too
The Aussie dollar came within kissing distance of 66 US cents on Friday
Global inflation slowed in September, including a softening in advanced economy inflation to its lowest level since September 2021. For Australia, we have revised up our forecasts for growth and inflation (in the near-term) while lowering our expected peak in the unemployment rate.
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UK best Eurozone on the PMI front in Thanksgiving- thinned markets
Todays podcast US data not supportive of Fed’s inflation quest US Jobless claims fall well below expectations Final U of Michigan inflation expectations revised up UST curve bear flattens. 2y up 6bps to 4.93% US equities ignore data and keep marching higher Oil slips on news OPEC + meeting delayed. Saudis not happy USD […]
Global growth resilient in Q3 but set to slow going into 2024
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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.
US equities start the new week in a positive mood, the USD has remained under pressure and after initially edging higher, longer dated UST yields edge lower supported by a well-received 20y Bond auction.
Another choppy night on bond markets with 10yr yields on net little changed and the curve twist flattening slightly.
A choppy session with softer-than expected second-tier US data seeing yields fall, while the USD gained smalls and commodity currencies underperformed
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.
Bond-fuelled lending to support near-term growth but challenges remain unaddressed
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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.
Subdued start to the week ahead of US CPI tonight
Two events late in the session dominated price action. The first was a poorly received US 30yr Treasury auction. The second was not dovish comments by Powell who sounded still hawkish.
Oil prices down again as demand pessimism deepens
Quiet data wise, but some notable moves in markets.
Homebody investors may love ASX blue-chip stocks and franked dividends, but could be missing out on opportunities in sectors such as artificial intelligence and renewables by ignoring offshore markets.
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It was a quiet start to the week for news flow, which was mostly reflected in market movements, though yields are generally higher.
Risk assets had a solid end to the week with softer US economic data releases fuelling the notion that the Fed is done with the current tightening cycle. Front end yields led a rally in UST yields while the USD extended its decline to a third consecutive day.
Risk-on continues in the wake of Wednesday’s FOMC meeting as investors price the aggressive monetary hiking cycle as being closer to the end.
Challenging conditions (particularly in Office and Retail markets) weighed further on commercial property market sentiment in Q3…
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The FOMC was on hold as expected. Yields are lower, though most of the moves came ahead of the Fed with soft US data.
Despite everything happening in the world, the AUD’s October trading range was extraordinarily low.
Japanese Yen slumps after only minor BoJ policy tweaks
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.
European and US equities ended the week with a cautious tone. The S&P 500 extended its weekly decline to 2.53% and entering correction territory in the process. Weekend news that Israel has begun a ground invasion of Gaza suggest markets are likely to retain a cautious tone at the start of the new week.
Risk sentiment remained fragile overnight with equities extending recent losses with disappointing earnings outlooks from major tech companies, despite mostly beating on current quarter earnings.
US equities are lower led by the tech heavy NASDAQ index and not helped by a new surge in UST yields. The USD extended yesterday’s gains with the AUD at the bottom of the G10 board, reversing its post CPI gains.
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.
A quiet night for data, but a big night for bonds.
Close but no cigar – US 10 year bonds traded to as high as 4.99% on Friday
Fed Chair Powell’s remarks have seen a choppy market response and a steeper curve, but against a backdrop of weak risk sentiment
Global inflation again picked up in August. A key contributor to recent inflation trends has been energy prices, with oil prices increasing since June. For Australia, our forecasts are unchanged. Recent data all point to continued resilience but the ongoing pass through of higher rates and high inflation still suggest consumption growth will soften in H2 2023.
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China’s third quarter growth beat expectations; 2023 forecast edges back above target
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Higher US yields and 'risk-off' tone see AUD's hard-fought gains undone
Inflation yet to be defeated – policy rates could stay high for longer
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Strong US retail sales sees yields rocket – 10yr yield +14bps to 4.84%
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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US CPI reverses much of the earlier week market moves
Global markets were relatively stable overnight ahead of tonight’s key risk event of US CPI.
Lower US bond yields and softer US dollar lift AUD back above 0.64
Reaction to the Israel-Hamas conflict triggers a spike in energy prices while German Bunds lead a rally in European bonds with US Treasury futures also pointing to a decline in US Treasury yields. Not all the initial moves have been sustained. The USD is little changed, AUD is up, after being down with Fed speakers favouring holding rather than hiking rates, helping US equities rally while European shares fall.
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 mark time ahead of payrolls tonight. Core global yields trade in narrow ranges, the USD loses a bit of altitude while US equities end the day little changed.
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.
A better-than-expected US JOLT report provided rattled markets. US Treasuries led a rise in core global bond yields, equities traded lower and the USD was stronger. USD/JPY gapped lower ( official intervention?) and AUD was the notable underperformer.
The AUD/USD’s 1.9 cents range in September was the narrowest since the 1.74 cents October 2019 range. Still, the USD was in the driving seat, fuelled by “higher for longer” Fed messaging.
The sell-off in global bonds continued with fresh cycle highs being set for longer-term yields. The
Global inflation was higher in July, although this uptick was not broad based – concentrated in a few key emerging markets. For Australia, our forecasts for GDP growth have strengthened marginally, reflecting a slightly stronger than expected result for Q2.
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Central banks may be at their peaks, but energy prices pose a risk to disinflation trend
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.
US equities start the new week in a sedated manner while European counterparts record sharp declines. Front end yields have a led a bear flattening of the UST curve and the USD is a tad softer
The Fed isn’t the only central bank making a call this week. There’s also that expected hike from the Bank of England, plus the central banks of Japan, Switzerland, Sweden and Norway.
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 […]
It was a subdued market reaction to the highly anticipated US CPI print.
Ahead of US CPI tonight, oil prices have ratcheted higher as OPEC+ cuts continue to bite
Todays podcast Tesla leads gains within in US equities Core global yields tick higher USD broadly weaker with JPY and CNY the notable movers JPY gains following Ueda’s interview suggesting openness to policy move this year CNY gains on PBoC strong fix, push against speculators and better data AUD and NZD benefit from spill over […]
US equities manage a marginal gain on Friday, but lower over the week and yields edge higher.
Yields are generally lower globally after a boost to US 2-year yields from lower jobless claims proved short-lived while equities declined.
A rise in Services activity last month confirms the US economy still sits firmly on top of the world
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
A softer Caixin Services PMI soured the mood yesterday, with the USD broadly stronger and the AUD the worst G10 performer
It has been a quiet start to the week in Europe and the US with the latter out celebrating Labor Day. US equity futures closed little changed while US Treasury futures are pointing to some small upside pressure on yields.
Neither the Fed nor President Biden could have scripted Friday’s US payrolls report any better had they tried
Overnight, the BoE’s Pill references ‘Matterhorn’ versus ‘Table Top Mountain’ approaches to monetary policy
US equities extend their positive run to a fourth consecutive day with softer US economic data fuelling expectations of a Fed on hold over coming months. UST yields edged lower while European yields rose following stronger than expected German and Spanish inflation data releases. The USD lost ground against EU pairs while the AUD is little changed.
Powell affirmed the Fed will ‘keep at it’ on inflation, but what else happened at Jackson Hole? In the weekly, we pull out some of the key insights, including on the outlook for government debt and the ‘friendshoring’ dynamic.
Aussie retail sales were stronger than expected in July, but World Cup fever was a factor says NAB’s Ray Attrill
Fed Chair Powell’s speech at Jackson Hole did not break new ground. US equities closed the day in positive territory with both the S&P 500 and the NASDAQ recording their first positive week since July. The UST curve flatten with front end yields ticking higher while the USD closed a tad stronger.
Caution prevails in front of Jackson Hole; stocks down, bond yields back up, AUD back lower
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.
US equities traded in and out of positive territory, essentially marking time ahead of NVIDIA’s reporting tomorrow and Fed Chair Powell’s speech on Friday. It was also a quiet FX session while in rates 10y UST yields printed a fresh 16-year high before consolidating.
US yields resumed their grind higher to start the new week, though there was little news to speak of, while US equities where higher.
Yields lower on Friday, but still close to recent cycle highs
It’s been onwards and upwards for global bond yields overnight, and AUD has spent time below 64 cents
Hopes have been raised of a soft landing for the global economy, although a number of headwinds remain. For Australia, our forecasts for GDP growth have strengthened marginally but we continue to expect growth to be well below trend in 2023 and 2024 as the impact of rate rises flows through.
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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, […]
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
Soft landing hopes rise but headwinds remain
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A stark contrast Tuesday between strong US retail sales and very weak China data
Soft start to Q3 signals a growing chance that China could miss its annual growth target
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US equities started the new week on a positive note, notwithstanding a negative lead from Asia. Core global yields have continued their ascendancy while the USD is broadly stronger with negative China sentiment weighing on the AUD and NZD
A higher-than-expected US PPI print contributed to higher yields, while equities ended the week on a muted note.
US Core CPI just 0.160% m/m and 3m annualised rate now 3.1%
Ahead of the July US CPI release tonight US equities closed on the back foot. Oil prices extend recent gains while LNG prices surge following news Australian workers vote to strike. Quiet night in FX land.
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.
Northern hemisphere summer holidays and a lack of data has seen markets treading water ahead of US CPI figures on Thursday.
Bond sell-off reverses on softer US payrolls
BoE lifts Bank Rate by 25bps to 5.25% as expected, to limited market reaction. US payrolls tonight
Yields rise, US 10yr hits 4.12% before easing back to 4.08%, highest since Nov 2022
The US Treasury curve bear steepened following news the US government will increase its bond issuance by more than previously thought. US equities recorded small declines and the USD is stronger across the board with the AUD the notable underperformer, RBA on hold and underwhelming China data not helpful.
US, China and local inflation news drove much of the AUD volatility in July
Markets were generally quiet to start to week ahead of key risk events later in the week (BoE Thursday, US ISM Services Thursday, US Payrolls Friday).
Friday’s BoJ announcements made a bigger initial impression on global bond markets than FX
Not much reaction to the ECB, says NAB’s David de Garis, but a big reaction in currencies and Treasurys to the latest US GDP numbers. With a lot of European data today and early next week, things could stay quite ‘whippy’.
Calling a US recession has been a bit like “Waiting for Godot”, the title of the 1953 play by Samuel Beckett.
The US FOMC hiked rates by 25bps to 5.25-5.50% as universally expected.
AUD approaches 0.68, buoyed by China stimulus news and RMB gains
Weak European PMIs have seen yields fall, though moves in US Treasuries retraced latter in the day.
Commercial property market sentiment and confidence moderates in Q2 amid growing economic uncertainty…
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US equities closed the week little changed with the S&P 500 in consolidation mode ahead of a new week that includes the FOMC meeting and a busy earnings calendar. UST were little changed and the USD continued its recovery.
US yields higher with Jobless Claims lower than expected
Our forecasts for the global economy are largely unchanged this month we expect growth of around 2.8% in 2023 before slowing to 2.7% in 2024. For Australia, we continue to expect quarterly GDP growth to be flat over the next three quarters, with growth of just 0.5% over 2023 and 0.9% in 2024 as the impact of rate rises flows through.
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Another bond rally, this time in the UK with inflation coming in softer than expected.
China’s weak Q2 growth presages weaker global growth
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Central bankers globally seem to have switched to a more measured tone recently. Overnight tapas
Underwhelming China economic data has weighed on sentiment, mostly in Asia and Europe with a decline in CNY also spilling over to NZD and AUD. Core global yields are a tad lower while US equities have resumed their upward trajectory.
China’s recovery lost momentum in Q2 and the outlook for the second half remains cloudy
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A bear flattening of the UST curve post a better than expected University of Michigan survey so the S&P 500 closed marginal lower while the USD found some support.
After the softer US CPI print on Wednesday the cooling US economy narrative was further supported overnight by a softer than expected US PPI print. Megacaps have led gains in US equities while front end bonds have led a decline in UST yields. The USD is broadly weaker with several FX pairs breaking through key support/resistant levels.
Any significant change to global supply chains will take time
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Yields tumbled and risk assets soared as US CPI came in much softer than expected
Ahead of the all-important US CPI release tonight, US equities edged higher again overnight while the UST curve flattened driven by an uptick in front end yields. The USD is broadly weaker, but the AUD has been unable to perform.
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.
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.
A quiet night overnight given shortened pre-holiday trade in the US ahead of Independence Day today.
The AUD/USD price action in June was a story of two halves. Soft US data and a cash rate hike by the RBA helped propel the currency to an intra-month high of 69c, but then concerns over China’s growth outlook and better than expected US data releases weighed in the second half of the month.
Friday capped a risk positive end to the week and the month of June with softer US economic data releases treated as good news. Weaker US consumer spending and inflation boosted US equities with gains over 1%, US Treasury yields traded lower after the data release and the USD closed the week broadly weaker.
The string of positive US data surprises continued overnight with a big drop in Jobless claims and a decent upward revision to Q1 GDP. US Treasuries led a jump in core global bond yields and US equities closed in the green, unperturbed by the move up in yields. Positive US data surprises help the USD reverse earlier losses, but the AUD/USD held its ground aided by yesterday’s stronger than expected retail sales figures.
Fed, ECB, BoE heads reiterate hawkish views; BoJ reiterates dovish stance
Better than expected US data releases and hawkish ECB talk are two main macro themes from the price actions overnight. US equities embraced the positive vibes from Asia and then better than expected US data releases provided an additional tail wind. In contrast, European equities were little changed with hawkish ECB talk dampening the mood. The belly of the curve led a rise in UST yields while the USD lost a bit of ground.
This week we examine some possible budget assumptions for Australian growth, inflation, wages, interest rates and the $A for 2023-24 as well as the context, thinking behind and risks to the forecasts
Quiet start to week with no market fall-out from weekend Russia news. Weaker Yuan a focus.
PMIs on Friday showed Eurozone output growth close to stalling, seeing Europe lead yields lower and the euro fall.
The BoE surprises market with 50bps, Norges Bank less so with its 50bps. SNB opts for a ‘hawkish' 25bps
After relatively robust growth in Q1, global activity looks set to slow in the near term. For Australia, we are seeing increasing signs that activity is slowing sharply after a very strong period of growth in 2022.
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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
Global growth set to slow as monetary policy bites
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Australia’s population growth has surged over the past year. The surprise has been how quickly it has rebounded after borders were re-opened from November 2021.
Soft risk sentiment overall last night which was mostly China driven.
European equity markets have started the new week on the back foot following a negative lead from Asia. Investors are seemingly disappointed by the lack of new news on China’s stimulus, US equities are closed for a holiday with futures contracts pointing to small dips for the S&P 500 and NASDAQ 100.
AUD ends a big if short local week at the top of the G10 currency pile, AUD/USD +2% w/w
Fed pauses in June, but another hike is likely
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Weakness in domestic demand led to underperformance in May
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US equities have pushed on yet again, shrugging off a string of soft US data releases. The ECB hiked its deposit rate as expected, lifted its inflation forecast and delivered a hawkish guidance. Core European yields climb on the back ECB news with the euro gaining over 1% while soft US data triggers a decline in UST yields with the USD weaker across the board.
Fed pauses as expected but ‘dot plot’ adds two, not one, more rate rises to 2023
Is China finding new markets for its exports?
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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.
After closing modestly higher on Friday, US equities have started the new week with modest gains, led by big tech. 10y UK Gilts, up 10bps to 4.33%, are the notable movers within core global bond yields on the back of hawkish BoE talk. The USD is a tad higher with AUD retaining its upward trend that has been in place since the start of the month. Oil prices tumble on supply-demand dynamics and another downgrade by GS.
Jump in US jobless claims supports lowers US yields and US$; S&P500 back in bull market
The BoC shocked markets overnight, hiking by 25bps to 4.75%.
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
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 go into today’s RBA decision ascribing a roughly 65% chance to a pause
A combination of a US debt ceiling resolution alongside a mixed US jobs report, still favouring a June Fed pause, and news that China may be considering further support to its beleaguered property sector boosted risk sentiment (VIX sub-15), major equity indices closed the week with solid gain.
A positive night for risk sentiment with equities up (S&P500 +1.0%; Eurostoxx50 +0.9%), USD down (DXY -0.7%), and yields lower (US 10yr -3.8bps to 3.60% and 2yr -6.4bps to 4.34%).
The AUD fell below 65 cents in May, in doing so re-establishing a more ‘normal’ monthly trading range after two months of highly compressed volatility.
The AUD had fallen to a new post November 2022 following more disappointing China data
Activity – and inflation – resilience continues
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After enjoying a long weekend, the US is back with mixed signals coming from equities and bond markets. US Treasuries have led a move lower in core global bond yields while the S&P 500 is unchanged. Oil prices fall over 4% with OPEC + meeting looming large, the USD is little changed, but AUD and NZD struggle, not helped by Yuan weakness.
Public Holidays in the US, UK and Germany made for a very quiet night as far as market moves are concerned.
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.
The US dollar extended its positive streak and yields globally were higher despite mixed economic data as AI-related tech saw US equites higher
Still no sign of breakthrough on US debt ceiling talks, souring risk sentiment.
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.
A quiet start to the week with little in the way of significant market moves.
Reports of a property rebound appear premature
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In this Weekly we explore two key US themes we are tracking closely for the trajectory of rates and inflation, in both Australia and the US
US equities struggled for direction on Friday, ending the day marginally lower. After a choppy session, UST yields closed higher across the curve with the USD broadly weaker, ending a three-day winning streak. Debt impasse did not helping sentiment while Fed Chair Powell expressed a bias for pausing rate hikes in June.
Hopes for a deal on the debt ceiling improved.
Global economic data point to a bounce in growth in Q1, with China providing around 40% of this total. For Australia, we continue to expect growth to be well below trend at 0.7% and 1.2% in 2023 and 2024 respectively – though we have reverted to our previous expected rate call of a peak of around 4.1% and see a material risk that rates reach 4.35%.
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Positive soundbites from Biden and McCarthy give hope a debt deal can be reached.
Global growth set to slow from robust Q1 results
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Base effects inflate growth in April; still waiting on demand to recover
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A flurry of global economic data but relatively modest market movements.
A quiet start to the week with little in the way of new news or top-tier data.
Markets were spoked on Friday by an unexpected rise in US consumer inafltion expectations
The Bank of England raised rates by 25bp as expected, while softer data out of China and the US weighed on risk sentiment
Markets are showing relief that the key US CPI release overnight was not higher than expected
Markets are treading water as we await the outcome from the Biden-McCarthy debt ceiling meeting and the US CPI data release tonight. US and EU equities have ended the day lower while core yields have edged a little bit higher. Fiscal updates revealed contrasting AU and NZ fortunes while cautiousness in the air has favoured the USD.
The Australian budget Tuesday night is likely to feature a small surplus for the current financial year...
US and EU equities have closed with modest gains while core yields extended Friday’s rise. The Fed Senior Loan Officer revealed a modest deterioration in lending standards alongside a drop in demand for loans, so no evidence of an imminent credit crunch. The USD is little changed with NZD leading a modest outperformance by pro-growth currencies.
Payrolls more than solid enough, challenging views of imminent rate cuts
Latest US yield curve movements are giving an even stronger signal of imminent US recession
The NAB Commercial Property Index improved a little further in Q1 but economic uncertainty seems to be weighing on confidence.
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US yields were lower and the dollar stronger with the FOMC increasing rates by 25bp as expected and dropping the expectation for further hikes.
Big moves in markets overnight as US regional bank worries reignited, signs of catering in European loan demand, and a sharp fall in US job openings.
Q1 GDP slowdown driven by inventories
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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.
The last trading day of April had a lot to digest with BoJ policy decision alongside market moving data both in Europe and the US. Equities ended the month on a positive move, core yields drifted lower amid growth concerns while the USD was little changed. JPY was the big underperformer and AUD starts the new week at 0.6601.
Softer US growth but stubbornly sticky prices has seen US yields higher, while US equities recorded their biggest gain since January.
The US share market is split between tech majors, doing well on the back of strong earnings versus Financials (and the rest) which are buffeted by banking uncertainty and recession fears. Core global yields are higher and the USD is weaker largely reflecting EU FX outperformance while the AUD has led a commodity linked FX decline.
Us equities haven fallen sharply, bond yields are lower and AUD/USD is back near 0.66, ahead of CPI this morning.
A quiet end to a choppy week, with some intra-day volatility following stronger than expected PMIs.
Weaker second-tier US data has helped push global yields lower, while disappointing earnings by Tesla (-9.7%) and talk of margin compression dragged down equities.
We continue to anticipate a sharp slowdown in global growth in 2023, while for Australia, there are signs that consumption is plateauing ahead of a likely slowdown later in the year.
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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.
The RBA ‘Fit for the future’ review out this morning, with media saying Treasurer Chalmers accepts all 51 recommendations
Bounce in global growth in Q1 won’t last
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A quiet overnight session despite the plethora of earnings reports.
Services sector supports growth rebound in Q1, as base effects boost consumption
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The uplift in US bond yields continued overnight, supporting the US dollar but not hurting equities
Stronger than expected US data pushed US yields higher and supported a broadly stronger US dollar on Friday.
Todays podcast Soft US PPI helps drive a risk-on rally Adds to views the US Fed is almost done USD falls, and AUD and NZD outperform Yields mixed, equities up ahead of earnings Coming up: US Retail Sales, US Bank Earnings “Love is in the air, everywhere I look around; Love is in the air, […]
US treasuries retraced most of their post-CPI rally overnight with core CPI coming in as expected.
It was a quiet session overnight ahead of key risk events later in the week (US CPI is on Wednesday and bank earnings are on Friday, including Wells Fargo, Citigroup and JP Morgan).
There were no major surprises in Friday’s US NFP report, unlike the prior days weekly jobless claims data.
Tentative recovery: Chinese outbound tourism continues to face constraints
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Softer US data saw recession concerns to the fore, with yields lower over the day but some safe-haven dynamics supporting the USD.
Late on Friday, the Treasurer formally received the independent review into the RBA, which has 51 recommendations.
A softer than expected JOLT report shook the market overnight, triggering a bull steeping in the UST. The USD fell with JPY along with European currencies outperforming. Commodity linked currencies lagged the move with AUD the notable underperformer, following yesterday’s RBA decision to pause it tightening cycle. US equities ended a four day rally with pro-cyclical sectors underperforming.
Weak US Manufacturing survey data overnight reversed the impact of higher oil prices, leaving bond yields lower and the AUD higher. It’s all about the RBA today
Following two months of well above-average ranges, the AUD/USD range reduced to just 2.2 cents in March, though the currency did hit a 4-month low of 0.6565.
A softer than expected US Core PCE Deflator (0.3% m/m vs. 0.4% expected) helped push yields lower on Friday (US 10yr -8.1bps to 3.47%).
It’s a third successive day of relative calm across markets, though an upside surprise to German CPI has seen European yields push higher.
The positive vibes evident during our trading session yesterday have extended overnight with European and US equity indices higher on the day. Movements in rates and FX markets have been more subdued. The USD is a tad stronger in index terms with JPY the notable underperformer. AUD and NZD are also lower with the former not helped by a yesterday’s softer than expected monthly CPI print.
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.
Bond yields are sharply higher overnight, improved sentiment towards the banking sector one key driver
Deutsche Bank woes weighted on European equities and on US equities at the open, but the latter enjoyed a decent rebound before the close. Core global yields ended Friday lower across the board , the USD was broadly stronger , but still fell for a third consecutive week, AUD and NZD were the week’s underperformers.
After a positive start, US equities struggled for direction amid lingering banking stability concerns. Front end tenors have led a decline in UST yields with similar price action seen in European curves. BoE, SNB and Norges Bank deliver on expected rate hikes. AUD gives back earlier gains as equities struggle.
Our global forecasts are little changed this month. Also, our outlook for the Australian economy is broadly unchanged.
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The FOMC hiked rates by 25bps to 4.75-5.00%, continued QT, and kept the existing dot plot which pencils in one further hike to 5.00-5.25%. Market reaction was dovish, but was not risk on.
Bounce in Q1 2023; but bank stress highlights weaker outlook
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Todays podcast VIX tumbles as investors see the glass half full ahead of FOMC early tomorrow morning Banks lead gains in Equities with HG bond issuance also signalling improvement in risk appetite UST and Bund curves bear flatten as market increases Fed and ECB rate hikes expectations 2y UST jump 20bps, 10y UST gain […]
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.
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.
A deal was struck over the weekend that sees UBS buying Credit Suisse for CHF3.0bn, a fraction of its value at Friday’s close. Iitial market response, in FX at least, has been (cautiously) favourable.
Fed caught between strong data & bank panic
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The ECB delivered on its 50bps rate promise but scraps forward guidance. Meanwhile the US’ First Republic Bank gets a $30bn deposit injection from other banks
Modest reopening rebound in early 2023 with consumers yet to re-emerge
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Banking sector turmoil is back to the fore driving all markets, today centred on Credit Suisse.
This week, we consider the likelihood of further tightening by the RBA and what impact - if any - the recent failure of Silicon Valley Bank might have.
Bond yields rose sharply on the developing assessment of turmoil in US banking, helped by but largely overshadowing a stubbornly strong US CPI.
Reassurances from US authorities not enough yet to appease markets. Bank stocks remain under pressure with bond yields diving as the path of future Fed hikes comes into question. The USD is also weaker across the board.
The collapse of SVB, the 16th largest bank in the US with $209bn in assets (as at 31 Dec 2022), shook markets on Thursday and Friday. That
Jump in US jobless claims provides hope US labour market may be cooling while Challenger layoff data suggests there is more weakness ahead Softer US data triggers rally in UST and weakens the USD. AUD struggles to perform as US equities tumble with bank stocks leading the decline.
Step down: China’s cut its growth target to a multi-decade low
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Markets broadly held onto Tuesday’s wild moves, which were driven by US Fed Chair Powell’s Senate Testimony. Overnight Powell spoke again to the House.
Is Australia different? We put the inflation and activity data in context and discuss why Australian rates might not need to go as high as elsewhere.
The market was not prepared for Powell’s hawkish remarks, sending short rates and the USD higher and equities lower.
Hawkish comments from ECB’s Holzmann send European yields higher in an otherwise quiet night for news flow
The US dollar and Treasury yields both fell back on Friday in what was a good day for equities everywhere – except Australia.
The run of worse than expected (global) inflation-related news continues to ripple through markets, the latest culprits being core Eurozone CPI and revised US Q4 unit labour costs.
The NAB Commercial Property Index improved in Q4, but is still negative overall and trending well below the survey average.
Insight
The US 10yr finally breached 4.00% for the first time since November, following five days of resistance. A hot German CPI and renewed price pressure in the Manufacturing ISM drove, while risk assets were mixed given the strong China PMIs yesterday
AUD performance in February was an almost exact mirror image of January, AUD/USD trading back down to near 67 cents from above 0.71 cents, having risen from sub-0.67 to above 0.71 in January.
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%.
Overall clients on the Sunshine Coast and Noosa continue to report strong conditions and very tight labour markets. While only a microcosm, the themes from these clients are broadly reflective of what we are picking up in the NAB Business Survey, and it is clear the RBA is not yet in sufficiently restrictive territory to slow demand enough to be confident that inflation will return to the 2-3% target
A quiet start to the week with no top-tier data. The biggest piece of news was the EU and UK agreeing to a new Northern Ireland trade agreement, now termed the Windsor Agreement.
The US economy has started 2023 from a stronger position that many of us had expected and when looking at the Fed’s new preferred inflation reading that tries to exclude much of the noise in the data, the story doesn’t change.
US equities stage a late recovery, but remain edgy
A range of global indicators point to a more positive start to 2023 than we had previously anticipated, leading to an upward revision to our forecasts. For Australia the economy has remained resilient but we see growth slowing sharply later in 2023 and into 2024.
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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.
Inflation is slowing but is still yet to be tamed
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The flow of economic data surprises has continued overnight and this time it was a uniformly stronger than expected performance of the services sector across major Developed Market economies.
President Biden visited Ukraine, where he pledged ‘unwavering support’ for the country as the Russia’s invasion nears the one-year mark.
It was mostly quiet on Friday and on the weekend, with an initial push higher in yields and sell-off in equities largely reversing later in the session.
US retail sales soared in January jumping 3% well above the consensus, 2.0% and Sales ex-autos jumped by 2.3%, more than double the consensus, 0.9%.
As for the data itself, US CPI was ever so slightly above consensus.
With many competing influences in the global macro backdrop, in this Weekly we take a step back and outline a framework for how we are making sense of the world.
The main takeaway being that Americans anticipate income growth to slow and inflation to stay elevated.
Headlines of impending Ueda nomination for BoJ Governor see volatile yen..
January data surprise = higher fed funds rate
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NY Fed’s Williams stressing importance of financial conditions in policy reaction function..
COVID’s rapid spread may allow a faster economic rebound in 2023
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NY Fed’s Williams stressing importance of financial conditions in policy reaction function..
Powell then also noted how the strength in the labour market underscores why the Fed thinks it could take time to bring inflation down.
The RBA this afternoon and Powell interview in Washington tonight are today’s main draw cards.
Fed pricing has shot back up following Payrolls and the ISM to almost fully pricing a 25bps March hike and then a follow up May hike (there is now 40bps priced across the two meetings, up from 30bps the day prior).
Big moves overnight with the BoE and ECB feeding the market narrative that the end of the tightening phase may be nearing.
Fed hikes by 25bps, signals ‘ongoing rate increases’ will be appropriate..
AUD/USD began the year at 0.6802 and ended January at 0.7056, a 2.5 cents or 3.7% gain.
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.
First to US wage data overnight. The Employment Cost Index (ECI) is closely watched by the Fed as it compositionally adjusts wages growth..
Market pricing for ECB meetings increased, helping European yields higher across the curve.
The S&P 500 Index closed 0.25% higher on Friday, finishing the week 2.5% higher.
Since Australia Day the two biggest pieces of news were the BoC explicitly signalling a pause to the hiking cycle on Wednesday after hiking by 25bps, and US Q4 GDP which although beating expectations had a soft underbelly (2.9% annualised vs. 2.6% expected; but private domestic just 0.2%).
European and US PMIs were the main data flow overnight.
Tech stocks lead gains in US equities. NASDAQ up just under 2%.
Q4 GDP looks solid but weakness emerging
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5% Netflix post-earnings pop helps drive best day for S&P500 in two weeks
USD softer despite ‘risk-off’ market tone.
Very weak US retail and industrial production adds to the tumble in yields
As the market waits for the BoJ policy decision today, the ECB has been the market mover overnight following a Bloomberg source story suggesting the Bank may be turning less hawkish.
Transition away from zero-COVID could boost growth in 2023, however needs to rebalance towards consumption
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US out for MLK day holiday. S&P futures little changed
US equities managed to claw back into the green on Friday to extend the strong start to the year.
US CPI cools as expected, but with even more encouraging details.
Ahead of CPI tonight US Treasuries (and bonds globally) have rallied, 10-year US notes off 5bps (3bps of that seen in the Tokyo session) and 2s down just under 2bps.
Economic news flow overnight has been relatively light, though playing with the grain of the suggestion from last week’s US data (ISM Services) that the US is in process of losing its global growth leadership position.
BoJ stuns markets with a 0% YCC tolerance band widening…
AUD/USD ended Dec 2022 much as it started. For 2022 overall, AUD/USD lost 6.2% which was the the second biggest annual range of the past decade, exceeded only in the 2020 first year of the Covid-19 pandemic.
The BoJ thus takes out our award for the most unpredictable central bank of 2022.
Equity sentiment has not been helped by a decent sell-off in core global bonds.
Recession risks were highlighted on Friday with the US S&P Global Services PMI again in contractionary territory.
Global business surveys continue to point to a weakening global economy, likely reflecting monetary policy tightening, the energy supply shock as well as COVID-19 related disruptions in China. For Australia, the recent national accounts data showed that the economy remained resilient in Q3 and labour force data continue to reflect a healthy but tight labour market.
Insight
Hawkish ECB rhetoric post 50bps rate rise spooks risk markets
Latest COVID-19 wave impacting activity in Q4; COVID policy pivot could provide boost in 2023 (after transition period).
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With inflation still high, policy rate hikes to slow growth in ‘23
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Early this morning and in line with market expectations the Fed lifted the funds rate by 0.5% to a range between 4.25% and 4.5%, a rates level not seen since 2007. The 50bps increase was a downshift following four consecutive hikes of 75bps.
In today’s weekly, we suggest a framework for sifting through the various forces buffeting the 2023 outlook and pose five big questions that we think need to be answered to judge how the economy and central bank policy will evolve in 2023.
CPI comes in cool at 0.1% m/m and 7.1% y/y, two tenths below consensus
A distinctly cautious air prevails in front of tonight’s all-important US CPI release and tomorrow’s FOMC.
Solid US PPI cements apprehension ahead of the US CPI & FOMC
It was a quiet night for markets devoid of any top-tier data or news flow ahead of key risk events next week (of US CPI, FOMC, ECB).
Domestic demand solid early in Q4
Insight
The Bank of Canada rose 50bps, the sixth consecutive increase, and took the target rate to 4.25%.
A key issue for markets is whether the US economy is headed for a recession in 2023, and when can we expect a meaningful moderation in inflation that would then enable the Fed to start to pivot
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".
US chips controls could constrain China’s tech development goals
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WSJ’s Fed Whisperer Nick Timiraos wrote overnight if CPI on Tuesday comes in hot then the Fed could consider another 50bp increase in February.
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 hold, and more importantly extend yesterday’s post-Powell moves.
Investors head Down Under with NAB to meet local issuers keen to engage with a uniquely stable, long-term funding source amid volatile times.
The AUD ended the month in the ascendency, boosted by a less hawkish than feared Fed Chair Powell speech, forcing a broad USD retreat.
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.
The RBA Review is underway and the three panel members recently publicly discussed their approach. In this Weekly we summarise these discussions and what changes the RBA panel is likely to recommend.
China vaccination push sees Hang Seng gains extended to 5%+ by the close
In a quitter session, relative to recent times, the risk positive vibes have extended into a third consecutive day with higher global equity markets, lower global rates and a weaker USD.
The single biggest piece of market-moving economic news overnight has come via the US S&P Global PMIs, which slumped to 47.6 from 50.4, well below the 50.0 consensus.
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.
US equity investors are certainly looking at the glass half full ahead of Thanksgiving tomorrow with all major equity indices showing decent gains on the day.
Oil market volatility is showing no signs of let-up , Brent crude down to a low of $83 overnight on a Wall Street Journal report suggesting Saudi Arabia was contemplating a 500,000 barrels per day production increase from December.
Latest Fed speak from Boston Fed President Collins, suggests 75bps is still in play for December, noting markets price around 52bps for the December meeting.
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.
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.
It has been a wild night in markets. After initially enjoying a broad and solid risk on move with equity markets rising and core global bond yields falling alongside a broadly weaker USD
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.
China refines, not abandons, zero-COVID and remains without an exit strategy
Insight
The new week has begun with a small reversal in the some of the risk positive moves recorded last week, particularly in FX markets and US Treasuries while equity market are showing resilience.
US CPI, US political gridlock (maybe) and China covid policy tweaks...
We see a sharp slowdown in global economic growth next year. To date, the Australian economy has remained very resilient although there are some very early signs of a slowing.
Insight
It has been a super risk positive night courtesy of a big downward surprise in the US CPI release.
NAB’s Commercial Property Index shifted back into negative territory in Q3.
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Further monetary tightening to significantly slow growth in 2023.
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Republican ‘red wave’ failed to materialise, but still expect slim House majority
By downshifting the pace of hikes, central banks are acknowledging that decisions are becoming more finely balanced as they tread a fine line of returning inflation to target, while avoiding significantly overtightening policy and slowing the economy more than needed.
The NAB Business Survey showed Conditions falling just one point to +22 to remain at very elevated levels, above the pre-pandemic highs for the series.
Speculation about China reopening continues to add some market volatility with WSJ reporting Chinese leaders were considering reopening steps getting some notice.
Risk appetite soared on Friday as Chinese whispers swept markets last week that China had put together a ‘conditional re-opening plan’, reportedly mapping out a material re-opening by March 2023.
Q3 GDP – economy growing again (for now).
Wednesday’s FOMC meeting continues to reverberate through markets.
Could Xi Jinping extend his leadership beyond his third term?
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FOMC Statement hints at reduced pace of tightening ahead…
It has been a volatile session in markets with risk assets initially lifted by rumours China was looking at phasing out its zero-covid policy, only for Beijing to later deny the speculation.
Australia specific influences on AUD once again played second fiddle to broader USD volatility and swings in risk sentiment.
NAB has pencilled in a 25bp hike, we also think there is a real risk that the RBA hikes by 50bps, and that this risk is higher than the 22% chance that markets are currently pricing.
Big gains in US equities on Friday help extend rally for a second week
The ECB meeting was the big event for markets last night and as expected the Bank delivered a 75bps hike, but it sounded less committal on future rate 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.
Last night’s first Federal Budget under Labor Treasurer Jim Chalmers contained no fireworks, falling fully in line with pre-Budget media briefings.
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.
This week we provide a further update on supply chain disruptions and highlight a few areas where businesses might reasonably expect some lower prices from suppliers in coming months.
Growth rebounded in Q3, but base effects flattered the results
Insight
Friday’s offshore markets produced as many fireworks as we have seen on just about any day this year with the mere suggestion of the Fed stepping down from 75bps to a 50bps incremental rate hike in December producing a fierce rally in US equities.
Terminal Fed Funds pricing have lifted to 5.00% by March 2023 from 4.92% last week and continue to price a 75bp hike at the upcoming November FOMC meeting and a 75% chance of a follow up 75bp at the December meeting.
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.
The selloff in bonds has seen a ‘reversal of the reversal’.
Australia’s second Budget for 2022-23 will be handed down next week (7.30pm on Tuesday 25th). Treasurer Chalmers has framed this Budget as one that will not add to inflation risks amid elevated cost-of living pressures and which occurs with a background of rising global recession risks.
Another big UK fiscal U-turn and positive earnings from BofA boosted global risk appetite last night.
Rise in 1y ahead US inflation expectations spooks markets
Rapidly tightening monetary policy, an energy price shock in Europe and deteriorating domestic conditions in China are set to slow global economic growth to 2.3% in 2023. For Australia, we see growth slowing to well below 2% in each of the next two years, however we do not expect a major downturn.
Insight
Volatile overnight session sees risk on, risk off then risk on again
Central banks inflation priority leads to weak growth outlook
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UK markets remain at the epicentre of global market volatility
Q3 CPI is on Wednesday 26 October and we forecast Headline of 1.3% q/q and 6.7% y/y.
Bailey in Washington says bond purchases will end as scheduled on Friday
Risk aversion has dominated the start of the new week amid heighted geopolitical tensions and a market disillusioned by credible BoE support for the Gilts market.
It was ‘good news is bad news’ for US Payrolls which were a touch better than expected and seen as too solid to support a pivot narrative.
Recession risk – Q3 breather likely temporary
Insight
In Australia there are two macro developments worth watching, Seek new job ads and Consumption imports in the August trade balance.
Another volatile session in markets; US equities opened lower, not helped by anticipated news of a bigger oil cut supply agreement by OPEC +.
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.
Yesterday 25bps RBA cash rate rise, defied the broad consensus among economists and investors (~45bps was priced in for the meeting) but which was justified by the Board in part on the premise that “the cash rate has been increased substantially in a short period of time”.
Vicious cycle: falling land sales hitting local government revenues
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The AUD/USD high of 0.6916 came on the 13th and the low of 0.6363 on the 29th (last day of the month).
A surprise U-turn by the UK government on the fiscal package and a weaker than expected US ISM Manufacturing (50.9 vs. 52.0 expected) have driven a large fall in global yields.
US equites fall on Friday to close out a 3rd consecutive negative quarter
In a positive development the OBR will provide preliminary costings of the UK’s fiscal package on 7 October, instead of the previously signalled deadline of November 23 (the same day as the Budget).
Bank of England has pledged to buy up to £5bn of longer dated gilts each day for up to 13 days (£65bn total) with a motive of protecting the UK pension industry.
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.
UK rates continue to push higher
Fallout from UK mini-budget continues.
Buyers fight back: Mortgage strike points to property sector’s weak underpinnings
Insight
Epicentre of current market turmoil shifts across the Atlantic to UK on Friday
BoE, SNB and Norges Bank follow the Fed’s +75bps with 50bps, 75bps, 50bps respectively
Fed hikes 75bps as expected, looks for 125bps in ’22 then 25bps more in ‘23
Markets will be looking for any clues from the RBA Board Minutes as to whether the RBA might step down from its 50bps rises back to 25bps.
A sourer tone took hold over the past 24 hours, with equities lower and haven currencies, including the dollar, stronger.
US yields continued to push higher ahead of the FOMC
Last week will be marked out as one of the more tumultuous for financial markets since the early days of the pandemic, says NAB's Ray Attrill.
Base effects flatter August’s growth rates, as a fresh COVID-19 wave threatens outlook
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We see global economic growth slowing in 2023. For Australia, we continue to see below trend growth over 2023 and 2024 as the impact of the lockdown rebound ends, global growth slows and higher rates and prices begin to weigh domestically.
Insight
Volatility has come roaring back in Thursday’s offshore session.
Economic outlook weakens as central banks continue to tighten.
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After recording hefty losses post the US CPI release on Tuesday, US equity markets closed with modest gains.
This week we update our analysis of the inflation reads in the NAB Business Survey and what this may mean for CPI pressures in Australia, particularly in Q3.
Today’s podcast Overview Rumours of inflation’s demise much exaggerated US CPI shocks to the upside: stocks, bonds take fright USD bounces back, AUD and NZD both down by more than 2% Next week’s Fed debate now seen to be between 75 and 100bps (83bps priced) German ZEW survey readings slumps while US NFIB Business Optimism […]
Positive risk sentiment ahead of US CPI tonight.
Risk appetite improves despite hawkish Fed talk
It has been all about the ECB and Fed overnight with the former delivering a jumbo hike and hinting at more to come while Fed Chair Powell reiterates commitment to act forcefully against inflation
A volatile night where earlier price action in Asia was largely reversed.
A broad rise in core global yields has been the big news overnight, fuelled by a better-than-expected US ISM report and news UK PM Truss is planning a huge debt-funded fiscal stimulus.
NAB expects the fourth successive 50bps interest rate increase to be announced on Tuesday as the RBA moves policy back to a more neutral level.
Eurozone bonds yields and stocks falling on the latest jump in energy prices – both oil and gas – following confirmation the NordSteeam1 gas pipeline will remain shut while Russian sanctions are in place.
A goldilocks payrolls report failed to support risk assets on Friday, with equities and the USD quickly reversing on news that Russia was not restarting gas flows through the Nord Stream pipeline
The AUD/USD spent August oscillating around the 70 US cents mark but spent much more time below than above.
The bond sell-off shows no signs of abating with a stronger than expected US ISM Manufacturing helping to drive the US 10yr yield up.
We'll help you find the right foreign exchange risk management strategy by understanding your core business and the challenges you face every day.
August has been a terrible month for balance fund investors with no diversification gains from holding a portfolio of equities and bonds.
Central bank officials from around the world met at Jackson Hole last week. In this Weekly we highlight the key discussion points and what implications this may have.
Goldman’s noted inflation could hit 22.4% y/y in the UK in early 2023 if gas prices don’t moderate and if there is little in the way of cost of living relief.
Labour market still very tight despite GDP fall
Insight
Following a negative lead from Asia, US and EU equities have begun the new week on the back foot.
After clocking 5.5 million podcast plays and 15,000 daily listeners, NAB’s Morning Call is celebrating six years of market highlights, with even more expert analysis to come.
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Fed chair Jay Powell’s address to the Kansas Fed’s Jackson Hole Symposium on Friday was short and as far as equity market investors were concerned, bitter not sweet.
Another day spent in anticipation of Powell’s speech tonight
Another night devoid of top-tier data or news flow. The past week has been a bit like Waiting for Godot with markets apprehensive ahead of US Fed Chair Powell’s Jackson Hole speech on Friday.
Composite PMI sub-50 everywhere in the world bar UK; US worst of all.
Markets are apprehensive ahead of US Fed Chair Powell’s Jackson Hole speech on Friday
NAB's Rodrigo Catril says the Canadians are out shopping; we also saw a big increase in purchase prices in Germany, in fact the largest monthly rise since 1949.
Following yesterday’s FOMC Minutes overnight we’ve heard from FOMC members wanting the Funds Rate up to 3.75-4.0% this year and questioning why you’d want to drag rate rises out into next year.
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.
Reopening rebound limited by weakness in domestic demand and credit appetite
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This week we expand on the hot inflation reads seen in the NAB Business Survey and what this may mean for CPI pressures in Australia, particularly for Q3.
After a negative start, US equities managed to end the day in positive territory supported by better than expected earnings reports from retailers.
Oil prices have fallen to their lowest since early February 2022 with falls of around 4% in part due to weaker China demand.
Equities continued their relentless rise, brushing off the inflation expectations data and hawkish Fed rhetoric
We now forecast the global economy to expand by 3.0% in 2022 before slowing to 2.5% in 2023. For Australia, we have pulled back our near-term growth forecasts, with high frequency data showing a slowing in consumption growth. Following growth of 2.2% during 2022, we continue to see below-trend growth of 1.6% through 2023 and 1.8% through 2024.
Insight
The San Francisco Fed’s Mary Daly warned it is too early to ‘declare victory’ over inflation.
Weaker growth prospects, persistent inflation & geopolitical risk
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It was all about US CPI overnight with markets reacting sharply to a lower than expected print with Equity and FX markets taking the CPI miss as a positive signal, taking some pressure off the Fed and a sign that inflation has peaked.
There was no let-up in elevated price pressures in the July NAB Business Survey published yesterday, with price indicators accelerating further from the already record highs of recent months.
In this Weekly we look at job ads in more detail to see what they may be portending for activity, and we also cross check the data with other information.
China is continuing its military drills around Taiwan, but that hasn’t impacted markets apart from gold (+0.7% to 1,787.61) retaining some slight geopolitical risk premium.
NAB's Commercial Property Index eased to +1 pt in Q2 (+11 in Q1) amid reports market is starting to respond to higher inflation and interest rates.
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Walking away? China’s ambitious growth target has moved too far out of reach.
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An all-round stronger than expected US employment report Friday dominated the end-of-week market price action; whether they extend or at least partially reverse this week hinges in large part on Wednesday’s US July CPI data.
As widely expected, the BoE lifted the cash rate by 50bps and retained the option to act forcefully in the future, the Bank now officially sees a recession in the horizon.
A few hours on from Nancy Pelosi leaving Taiwan and markets have almost forgotten she ever came. Equity market have recovered their poise, a tech sector rally seeing the NASDAQ close at its highest level since 4 May.
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.
In Australia, the RBA met yesterday and raised the official cash rate by 50bps to 1.85% as expected, the third consecutive 50bps increase to be at its highest level since April 2016.
The AUD/USD opened the month at 0.6903, fell to its monthly low of 0.6682 on July 14 and made a high of 0.7032 on July 29 before closing the month at 0.6985.
Data releases over the past 24 hours have provided further evidence the global economy is slowing. China’s Caixin Manufacturing PMI confirmed that China’s reopening rebound is over.
US economic data on Friday underscored the inflation challenge facing the Fed
GDP falls again in Q2
Insight
ECB’s Visco says “there is a risk of a recession” and that ECB policy can’t drive down gas prices.
The Fed delivered a unanimous 75bp hike as widely anticipated.
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.
More price increases are likely for food and grocery. If they continue to rise in Q3 and Q4, it is hard to see US core inflation numbers moderate sufficiently for the Fed to pivot.
Kremlin confirms 20% cut of gas to Europe from Wednesday. Gas up 9%
A round of softer than expected PMIs on Friday added further fuel to ongoing concerns over a global economic slowdown with the move into contractionary mode for both the EuroZone composite and US Services PMIs the main culprits.
The ECB hiked rates by a more-than-expected 50bps, taking the deposit rate back to 0% and ending its negative interest rate policy that has been in place since 2014
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.
ECB now seen hiking by 50bps tomorrow and then again in September
In this Weekly we shine a spotlight on the household sector and what trends are starting to show as households react to higher interest rates and above-target inflation.
COVID-19 measures hit China’s economy harder than expected in Q2, and present downside risk to the outlook.
Insight
Oil is the standout mover, Brent +$4.50 and WTI crude +$4.60 on reports Saudi Arabia won’t be pumping any more oil
Risk sentiment rallied on Friday with a better than expected US retail sales print and positive earnings from Citigroup lifting equities
Globally, major central banks continue to tighten monetary policy in response to the highest inflation in decades, thereby straining household finances and leading to falls in asset prices. For Australia, we have not changed our view on the underlying trajectory for the economy but see greater risk for household consumption on the back of higher rates and inflation.
Insight
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.
Tightening monetary policy puts the brakes on growth prospects
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Bank of Canada surprises with ‘front-loaded’ 100bps rate rise
Risk off again overnight as recession fears intensify
In this Weekly we highlight some of the indicators that suggest a peak in global inflation is near
Risk off ahead of a big week for data, partly driven mainly by China virus news
US June non-farm payroll employment 372k vs. 265k expected.
Risk sentiment improved over the past 24 hours.
Higher US yields together with a further drop in the EUR sees the USD in DXY terms now at its highest since September 2002.
Brent oil prices are down 17% since 14 June and have the potential to drive some welcome relief on headline inflation prints.
In this Weekly we explore how central banks may respond to rising recession risk and expand upon some of the leading indicators of recession
Europe remains stuck in the middle between the Russia/Ukraine crisis and a weakening global economy
How will the US respond to China’s failure to meet its trade commitments?
Insight
After a dismal first half, US equities start H2-22 with a positive tone
The AUD/USD opened the month at 0.7170, made a high of 0.7283 on June 3 and fell to its monthly low of 0.6851 on June 15.
Core global yields have been the big market movers overnight with European bonds leading the decline in yields.
In this weekly, we look at some indicators that might reliably provide warning of some unwind or easing of the supply chain disruptions.
Weaker US consumer confidence dents equities
US equity markets have begun the new week on the back foot with a clear lack of conviction.
It was a great day for US stocks on Friday, with two-thirds of the mid-month sell-off now retraced.
Despite softer PMIs and still-hawkish messaging from the Fed, US equities managed to turn around intraday.
Recession or hard landing fears have taken a firmer hold on most markets in the past 24 hours.
Some relief in equities with a strong bounce back from last week’s decline
The Fed tightens the screws.
Insight
The RBA is front and centre in local markets this morning.
US and European equities showed signs of stabilisation on Friday, but still ended with sharp declines on the week which was not helped by Fed Chair Powell's words that the Fed has unconditional commitment to restoring price stability.
Global inflation remains high and showing no signs of easing, placing pressure on household finances. For Australia, we have lowered our GDP forecast for this year and next, upped our near-term inflation outlook and incorporated a new, front loaded rate track for the RBA.
Insight
The Bank of England rose rate by 25bps and left its options wide open on future moves
Global growth prospects continue to weaken.
Insight
Fed delivers 75bps rate rise, sees 50 or 75 most likely at next meeting
COVID-19 uncertainty continues to cloud China’s economic outlook.
Insight
The key policy challenge will be to gradually return inflation to the 2%/2-3% target ranges sought in the US and Australia respectively, while avoiding taking interest rates too high producing a recession and a sustained rise in unemployment
Ahead of tomorrow's FOMC meeting we have seen an increase in market volatility across Equity, Rates and FX.
A hot US CPI report and signs of inflation expectations de-anchoring on Friday has seen yields surge, risk assets sell off, and recession talk rise.
Announcing the end of the Asset Purchase Programme (APP) as of July 1, the ECB also pre-announced a 25bps rise in interest rates out of its July meeting with a further rise planned out of the Sept meeting.
Rise in oil prices fuels inflationary concerns and the need for central banks to increase their hawkishness.
RBA surprises (most) for second month running with 50bps Cash Rate rise to 0.85%
Yields rose notably in what was a quiet night for data and events.
Markets took the strong US payroll gains on Friday as affirming the near-term path for continued Fed tightening.
A positive day for risk sentiment ahead of US Payrolls tonight on no new news
Reaction to a strong set of US data releases has been the main story overnight
Low cost outlier: China’s consumer price growth has remained weaker than most international peers.
Insight
AUD/USD hit a near two-year low of 0.6829 on May 13 after hitting its highest May prints earlier in the month (0.7266, seen on both May 4 and 5).
Inflation is back in focus with European inflation at its highest ever level of 8.1% y/y helping rates extend yesterday’s selloff.
Brent oil recorded its 8-consecutive day of price increases, supported by expectations of a China reopening in addition to the expected EU Russian oil ban.
After having moved briefly into bear market territory the previous Friday, last Friday saw the S&P500 up by its largest weekly gain so far this year.
US equities had a strong night with the S&P500 +2.0% and NASDAQ 2.7%.
The market found some relief on the notion that the FOMC Minutes revealed a broad consensus for 50bps hikes in June and July and the possibility for a pause later in the year.
Revising down US growth forecasts.
Insight
In this Weekly. we discuss how broader financial conditions, and not just the cash rate, are influencing the economic outlook.
Monday’s upbeat sentiment was short-lived with falls in equities and yields overnight.
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.
The S&P500 falls into bear market terrain Friday before late day pull-up
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.
NAB’s Commercial Property Index rose to +11 pts in Q1, building on the gains seen in the last quarter when the index moved back into positive territory for the first time in 2 years.
Insight
The S&P500 high to low fall since the early January high puts it down 19% year to date and although not officially in bear market territory yet, looks to be only a matter of time.
The UK's unemployment rate fell to it's lowest level since 1974 and along with a further pickup in average earnings growth, now see money markets pricing 125bps of BOE rate hikes by December.
The biggest news overnight is commodities, oil prices are up, which threatens to prolong the inflation narrative.
COVID lockdowns point to weaker growth and greater uncertainty in the near term.
Insight
US Consumer Sentiment fell further than expected to be at its lowest level since August 2011 and with consumer confidence so low, the risk of recession is rising.
We now expect the global economy to grow by around 3.4% in 2022 and 2023. For Australia, we continue to be optimistic on the economy expecting above-trend growth this year and ongoing strength in the labour market.
Insight
Risk assets remained out of favour as concerns over inflation and recession risk continued to dominate.
Growth set to slow to below its long-run average
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Another volatile session in markets with an upward surprise in the April US inflation data release adding an extra layer of uncertainty
The RBA met last week and raised rates by 25bps, lifting the cash rate target to 0.35%, and signalled further hikes over coming months
Decline in inflation expectations drive core global bond yields lower with further fall in oil prices helping the move.
The ongoing theme of mounting growth concerns against a backdrop of central bank tightening is continuing to drive market movements.
The current debate in Markets is whether the Fed would be willing to let the economy slip into recession to tame inflation.
Inflation is now forecast to peak at over 10% this year in the UK
Powell comments that 75bps isn’t something the FOMC is actively considering and that 50bps is on the table for the next couple of meetings
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
Even with GDP falling in Q1, the Fed is set to move faster.
Insight
The COVID-19 pandemic could accelerate China’s long term demographic pressures
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US 10-year Treasuries have just breached the psychological 3% barrier for the first time since late November 2018 in what has been a further bear steepening of the US curve
Sentiment toward the AUD went from hero to zero in April.
The NASDAQ recorded its worst monthly performance in more than a decade.
A wild ride in FX markets over the past 24 hours
News of Russia’s decision to cut gas supply to Poland and Bulgaria triggered a 30% jump in EU gas prices at the open before eventually settling 10% higher.
The World Bank has warned the war in Ukraine is set to cause the "largest commodity shock" since the 1970s (referencing the 1973 oil embargo).
Follow the money: The strength of China’s outward foreign investment during pandemic raises questions.
Insight
There’s been a strong risk-off sentiment to the start of the week.
Markets are a little easier to understand today. Bond yields are back on the rise, given inflation expectations and more hawkish rhetoric from central banks.
COVID outbreaks dampened growth in March, and cloud near-term outlook.
Insight
Bond yields have fallen sharply overnight, but that doesn’t mean inflation expectations are going away, or does it?
It’s not something that will continue for long, but US bond yields have risen sharply today, and so have equities. Which one will give in first?
Global yields continued their March higher over the Easter period with the US 10yr yield hitting a fresh cycle of 2.88%, its highest since 2018.
The global economic outlook remains clouded by numerous factors, however, we expect that the global economy will grow by 3.7% in 2022 and then slow to a trend- like 3.5% in 2023. For Australia, GDP is expected to grow by a strong 3.4% this year – supported by healthy growth in consumption and ongoing gains in business investment.
Insight
COVID and conflict continue to cloud near term outlook.
Insight
Despite 50 basis point hikes by the Bank of Canada and the RBNZ over the last 24 hours, bond yields haven’t moved a great deal.
US inflation rose as expected, but there’s still been a reaction in the bond markets.
Higher inflation is starting to impact buying conditions in the US. Will we see the same trend emerge in Australia?
Bond yields continue to climb with risk assets now coming under pressures.
No respite from rising Treasury yields – 10s up another 4bps to 2.70% +32bps on week further hurting tech. stocks/NASDAQ vs other indices and boosting USD DXY index to 100.
The reaction to the Fed minutes early yesterday morning continued to dominate markets overnight.
FOMC Minutes reveal plans for much faster and more aggressive balance sheet reduction than 2017-2019
RBA’s April meeting yesterday left policy on hold at 0.1% but underwent a substantial rewrite to the post meeting statement.
Talk of Europe restricting Russian oil and gas has re-surfaced, driving oil prices higher
Eurozone inflation printed a new record high with ECB hawks calling for policy action.
The main news overnight is the US decision to release 1m barrels a day for 6 months from their strategic petroleum reserve
ECB Lagarde warning of supply and uncertainty shocks from the Ukraine war.
Last night’s Federal Budget contained few surprises and won’t be a big influence on markets this morning.
It has been a nervous start to the new week with big moves seen in rates, oil and FX markets.
Economists outdo each other for Fed hikes with Citi calling four 50 basis point hikes back to back
Investors are showing a preference for US equities with all three major indices enjoying a decent rebound after yesterday’s decline.
Fed lifts rates – more to come.
Insight
Russia intends to make ‘unfriendly’ countries pay for gas in rubles.
Yields continue to rise with US 10yr now +9.6bps to 2.39%.
US bond yields march higher pre and post Powell speech
AUD/USD closed above 0.74 for the first time this year, cementing its position as the world’s strongest G10 currency year to date.
Russia makes USD bond payments, adding to a sense of hope on Russia/Ukraine
COVID and energy prices present sizeable risk to China’s ambitious growth target.
Insight
US Fed lifts cash rate 25bps, as expected
In this Weekly we explore how central banks might balance the two conflicting forces – inflation expectations key according to Fed speak.
A switch of market focus from Ukraine to China (and Hong Kong)
Yields have soared even as commodity prices have fallen.
Friday was a day of contrasting fortunes for US and EU equity markets.
Globally, the conflict between Russia and Ukraine has caused a significant spike in energy prices – reflecting the importance of Russia in the production and export of oil, natural gas and coal, in combination with limited additional supply elsewhere. Locally, the war in Europe poses risks on both the activity and nominal sides of the economy, uncertainty is now highly elevated – but the central-case for Australia’s economy largely remains strong.
Insight
The ECB has surprised markets with an accelerated QE unwinding plan
Russian invasion triggers uncertainty & volatility in global markets.
Insight
War still rages, but Eurozone stocks and EUR roar back to life
Markets remain volatile unable to confidently price implications from the news flow given the complex state of the global economy
Brent oil is up 30% on the week to US$130 a barrel and wheat, thermal coal and gas prices have also surged.
Germany rejects proposed US, EU embargo on Russian oil imports
Risk sentiment was hammered on Friday with sharp falls in stocks and a large rally in bonds
EU considering further measures against Russia overnight which would allow them to impose tariffs and quotas to Russian exports, further disrupting global trade.
Our Q4 survey saw commercial property market sentiment move into positive territory for the first time in 2 years, with the NAB Commercial Property Index at +3 pts.
Insight
Russia’s Ukraine invasion and sanctions continue to roil commodity markets which were already tight given the increase in demand from a reopening global economy and low inventories
Despite being the month when Russia invaded Ukraine, the high-low range in AUD/USD was less than in January.
History suggests Russia’s actions in the Ukraine may result in only a short-lived episode of risk aversion with contemporary macro themes eventually reasserting themselves.
Risk sentiment craters (S&P500 -1.3%) as the Russia/Ukraine situation has no sign of ending
China’s outsized property sector presents a major drag for growth in 2022.
Insight
News from Ukraine remain bleak with Russia Ukraine talks yielding no resolution while fighting rages on.
Markets are opening up to headlines that ‘Putin puts Russian nuclear forces on ‘special alert’.
Biden announces range of sanctions on Russia, but not including SWIFT.
Ukraine/Russia tensions continue, no further military escalation apart from cyberattacks
Restrained market reactions so far (bar oil) to Russia-Ukraine developments…
How high rates will go in this cycle is a key question that is being asked by clients.
Geopolitical tension lifted overnight with President Putin formally recognising the two Ukrainian breakaway regions of Donetsk and Luhansk and signing aid and cooperation agreements.
US President Biden is convinced Russia has decided to attack Ukraine
Solid start to Q1 activity data; Fed to start lifting rates in March.
Insight
Yesterday’s glimpses of risk off vibes have intensified over the past 24 hours with Russia Ukraine tensions the main culprit.
The standout data point overnight was US Retail Sales, which came in well above consensus expectations.
President Putin spoke to the media saying that "of course" Russia does not want war in Europe, but then added that his security concerns must be addressed and taken seriously .
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.
The S&P is back in the red (-0.5%) following reports of satellite images being circulated purportedly showing Russian troops leaving assembly points and moving to attack positions.
Globally the Omicron variant of COVID-19 has spread rapidly; the sheer number of cases is disrupting economic activity as infected workers are forced to isolate. In Australia, we have revised up the expected rebound in Q4 GDP, but pulled down Q1 2022 as the spread of omicron weighs on the economy through both consumer caution as well as disruption to business.
Insight
Latest COVID-19 wave has led to a soft start to 2022
Insight
Russia/Ukraine headlines weighed heavily on risk sentiment late Friday with the US again warning Russia could invade at any time.
US inflation comes in hot again with core measures showing wides-spread inflation pressures
Lots of central bank speak from Fed, BoC, ECB and BoE today
A bumper year of corporate issuance in Australia and the re-emergence of value in offshore markets leaves Australian issuers with great funding choices heading into 2022.
The key question as yields march higher is how high can they go in this cycle?
The RBA made a second major change to their forecasts for inflation and unemployment in three months
Inflation and related central bank thinking remains by far the bigger influence on market sentiment
US economy brushes Omicron aside with a strong January Labour market report
European yields soar as ECB pivots more hawkish – Lagarde fails to rule out hiking in 2022
Equities recovery continued overnight with both European and US markets extending recent gains.
It was an eventful start to the year, AUD/USD tracing out a range from a high of 0.7314 (Jan 13) to a low of 0.6965 (Jan 30)
The US economy is travelling with some momentum along side a tight labour market and still elevated inflationary pressures
Dynamic clearing – shifting the message rather than broad policy towards COVID-19.
Insight
Bostic retracts his 50bps comment, states “is not my preferred policy action” for March
CPI figures last week illustrated Australia is not an island when it comes to global inflation pressures
AUD below 0.70 to lowest since mid-July 2020 – month end could be a factor
Shares attempts a recovery but US equities back in negative territory in afternoon trade
Fed policy tightening brought forward.
Insight
China enters 2022 with relatively weak momentum and considerable uncertainty.
Insight
Hawkish hold by the FOMC/Powell sees yields rip higher and equities reverse earlier gains
Geopolitics has had an influence on markets today, but the influence of the Fed should still not be underestimated.
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.
Bond yields retreated at the end of last week even though the assumption remains that the Fed will signal a March hike.
RBA to end QE in February while forecasts suggest Omicron is set to peak, adding greater inflation risk.
Latest flurry ahead of January 25-26 FOMC suggests March rates lift off expected.
AUD/USD made its low point for the year on Dec.3 at 0.6993 – the pair’s only foray below 0.7000 in 2021.
US and EU equities rebound overnight with mostly positive Omicron news lifting sentiment while company specific news have also helped the cause.
Commodity market news overnight is a fresh surge in European gas prices
Expect a cautious start to the week with the Netherlands going into lockdown on Sunday
For Australia the Q3 national accounts showed a smaller hit to activity than we had expected but we continue to see a very strong snap back in activity in Q4. Globally, advanced economy growth was robust in Q3, and a similar outcome is expected in Q4 albeit with a shift in the source of growth away from Europe towards the US and Japan.
Insight
Against the consensus view for an unchanged outcome, the BoE unexpectedly also raised rates by 15bps to 0.25%.
Global recovery continues but inflation is high and Omicron a concern.
Insight
November data show little underlying improvement from October’s weakness.
Insight
The FOMC delivered a hawkish tilt for Christmas with the Fed dot plot showing three rate hikes in 2022 while also accelerating the taper profile.
US PPI beat expectations fuelling hawkish FOMC expectations
A look at what’s been happening in the sustainable finance market – in Australia and abroad.
2022 is set to become a year of central banks removing monetary accommodation.
Slight risk aversion to start the week with equities down, yields down and US dollar up
Limited market reactions to ‘as expected’ US CPI – 6.8% headline highest since June 1982
Risk tone deteriorates in front of US CPI tonight, lack of positive new news on Omicron
Q4 GDP looking strong; Fed turning more hawkish
Insight
After a solid run in the previous two days, equities are taking a breather with European shares closing lower amid concerns over the need for a new round of covid restrictions.
Strong management and a robust institutional framework are driving an optimistic outlook in the higher education sector for when international students return to campus life.
Markets continue to travel with optimism that Omicron will not have the severity of prior variants in terms of health outcomes, even if it is more transmissible.
Markets might be right on the interest rate outlook.
Positive Omicron reports coming from South Africa alongside an encouraging preliminary assessment from Dr Fauci over the weekend boosted sentiment with overnight news of policy easing in China, an additional bonus.
As we start a new week, Omicron headlines were positive on Saturday which may add to some stabilisation in risk sentiment.
Risk sentiment recovered overnight with virus/vaccine news flow being net positive
Spreading the wealth: Common Prosperity may start to address inequality in China.
Insight
The US CDC has just identified the first case of Omicron in the United States – joining the UK, Switzerland and Brazil overnight – at a time when US infection rates of the delta variant had already started creeping back up.
The overwhelming negative influence late in the month was the emergence of the Omicron covid-19 variant and doubts over the efficacy of existing vaccines against this strain and all that might imply for the global economic re-opening process.
NAB expects that the RBA will raise rates from mid-2023 with a relatively aggressive series of hikes thereafter.
It has been a volatile session overnight driven by differing headlines around vaccine efficacy, capped off by very significant hawkish tilt by US Fed Chair Powell in Senate Testimony.
Global markets have seen a modest retracement of many of last Friday’s violent ‘risk-off’ moves, with equities higher in Europe, so too US government yields up, as too is oil, but in all cases to nowhere near Friday’s closing levels.
Omicron uncertainty triggers a rethink on the global economic outlook
BoE’s Bailey still guiding that rates will need to be higher ahead of the Dec MPC meet.
Dovish Fed Official (Daly) flips to looking at accelerating tapering and to hikes in 2022
Eurozone PMIs spring upside surprise, supporting EUR and holding USD in check
Fed Monetary Policy Update.
Insight
Austria has re-imposed lockdown restrictions with a sharp rise in hospitalisations being driven by both the unvaccinated and older fully vaccinated people.
Ahead of a speech by President Biden later today on the economy and inflation, we got news that Jay Powell is to be re-appointed to a second term as Fed chair.
Rising COVID infections around Europe and news that Austria will go into lockdown rattled markets on Friday with 10y Bunds leading a decline in core global bond yields.
Fed speak was not market moving, but it is worth noting it is mostly turning slightly hawkish.
Some in the market were positioned for an upside surprise in Australian wages data, but that wasn’t forthcoming, with the data bang in line with expectations at 2.2% y/y, back to pre-pandemic levels.
Trio of strong data with US Retail, US Industrial Production, and UK Jobs all beating
Our 10th biennial survey – the only survey of its kind to examine hedging techniques of Australian Super Funds – captures their shifting priorities in this rapidly changing landscape.
The RBA’s wish of achieving wages growth at 3% plus is well known, however the reaction function is not as clear
Data, supply and hawkish CB talk push core yields higher
Partials point to a weak start to Q4, with production and retail soft and investment contracting.
Insight
After the fanfare of the opening statements and commitments, the second week at Glasgow meant bridging divides to reach a consensus deal in extra time as the Paris 2015 ambitions start to take flight.
US stocks had a positive day on Friday, so further recouping some of last Tuesday and Wednesday’s pre and post CPI weakness
We have trimmed our global economic forecasts this month to 5.7% for 2021, however should this occur, it would still be the strongest rate of growth since 1973. For Australia, our internal data and NAB Monthly Business Survey indicate the economy is again rebounding strongly as NSW and Vic reopen following the extended lockdowns through mid-2021.
Insight
The US has been out for Veterans Day, though stock markets have been open and have recouped a little of their pre and post US CPI losses
Supply side continues to constrain activity, driving inflation higher.
Insight
US CPI jumped in October with annual readings printing at new multi-decade highs, the broad base acceleration in prices challenges the transitory narrative and increases the pressure on a patient Fed.
To the market: China’s power crunch is forcing much needed energy reform.
Insight
Risk sentiment takes a turn for the worse with the first S&P down day in nine.
In this Weekly we look at Australia’s latest monthly deficit figures ahead of MYEFO in December, which show the deficit is set to come in much better than expected even with Sydney, Melbourne and Canberra having been in lockdown
US equities close slightly higher while Europe starts the new week on the back foot.
There was a mixed market reaction to the better than expected US Payrolls print on Friday with equities up, yields down and the USD lower.
An insight into what the road to carbon neutrality really looks like
While the world’s press and pundits assess the ongoing talks in Glasgow, we look at what’s happened so far and what to expect during this crucial time for climate action.
The BoE shocked markets overnight with its thunderous silence.
No surprises from the FOMC in its formal policy pronouncement, the Fed announcing a November start to the QE tapering process at the as-expected pace of $15bn per month.
The Q3 NAB Commercial Property Survey shows sentiment has declined, reflecting a fall in business confidence and conditions following the extended lockdowns in VIC and NSW.
Insight
Global yields fall at the short end in the wake of the RBA’s dovishness yesterday.
Stock mostly firmer at start of new month, Europe faring better than US where S&P 500 ends +0.2%
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.
The RBA’s failure to buy the bond in the days following the Q3 CPI report convinced the market the YCC target at least in current form, was set to be formally abandoned out of the 2 November Board meeting.
US equities have remained resilient and oblivious to the volatility seen in rates markets amid increasing concerns over higher inflation and the prospect of Fed funds rate hikes coming sooner than expected.
Growth slows in Q3 but inflation still elevated.
Insight
US equity continue to march to their own beat, oblivious to softer data releases and volatility in rates markets driven by Central Bank policy uncertainty.
A volatile night for rates markets with short-end rates shooting up driven by hawkish signals from yesterday’s Aussie Q3 CPI and Bank of Canada meeting, but longer-end rates tumbling after the UK budget showed a sharply lower debt profile.
US and European equities have ended the day in positive territory, supported by solid earnings reports and better than expected US data releases.
The RBA is likely to lag the US, UK and NZ in rates normalisation coming out of the pandemic.
Inflation fears continued to build amid the backdrop of a strong Q3 earnings season which is showing firms have some pricing power to pass on higher transitory inflation
Friday’s main economic events, namely the ‘flash’ PMIs, tell us that there is little reason to fear stagnation, for the time being at least, given still elevated levels for all readings across Europe and the US.
The S&P 500 has extended its winning streak to a sixth day with mixed earnings and a subdued Fed Beige report not enough to derail the positive vibes
If the market is rethinking how soon the Fed might lift rates, there was nothing from incoming Fed speakers overnight to support this view.
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.
Although the US is less exposed to the energy crunch, supply bottle necks are still affecting its economy, particularly in sectors there is a shortage of workers, raw materials, and chips.
A series of crises stalled Q3 growth and present downside risk to the outlook.
Insight
Inflation fears are clearly lifting, with the latest driven by the rise in energy prices.
We have revised our global economic forecasts lower – to 5.9% for 2021. For Australia, a very sharp fall in activity in Q3 is locked in however we continue to expect a solid rebound in Q4 , and strong growth continuing into early 2022.
Insight
The sun has been shining on risk sentiment, commodity prices and commodity currencies overnight
Energy woes add to persistent supply bottlenecks in slowing global recovery.
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With markets having aggressively pushed Fed pricing into 2022, it is likely there is some thought that such a tightening will weigh on demand earlier.
The ‘Quit Rate’ is the highest on record, reflective of the ease which workers are switching jobs, in part at least for better pay or conditions elsewhere.
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.
The rise in energy prices is fuelling concerns that the transitory lift in inflation seen in the wake of the pandemic may prove to be longer lasting.
US September payrolls were a big miss, but strong revisions to prior months alongside a decline in the unemployment rate and lift in hourly earnings resulted in a relative subdued reaction by markets, suggesting the figures were strong enough to keep the Fed on track to begin its QE tapering programme in November.
Risk asset have enjoyed a solid rebound overnight following news that the US Senate had reached an agreement to extend the debt ceiling through early December.
High vaccination rates should give consumers confidence to resume economic activity as restrictions ease.
Words from politicians of various stripes have gone a little way to alleviating two of the major concerns currently plaguing global markets, namely the ongoing energy crisis centred on Europe and the looming deadline for lifting or scrapping the US debt ceiling
European and US equities rebounded overnight with a stronger than expected US Services ISM supporting the view that it’s all good, notwithstanding the ongoing rise in energy prices and supply bottlenecks.
NSW meeting the 70% full vaccination target may be announced as early today (more likely tomorrow) in which case it may well attract more local media headlines than the RBA meeting.
The Fed is set to taper – but rate hikes are still a way off
Insight
US equities finish last week strongly with positive trial results from Merck's Covid treatment drug helping sentiment.
Forces acting on the AUD (and other commodity linked currencies) independent of USD strength in September were largely China related.
Debt bomb – managing the fallout from Evergrande will be a key challenge for Chinese authorities.
Insight
US equity losses accelerate into Thursday’s close; worse month for S&P500 since March 2020
Equities made an unconvincing “buy the dip” bounce as yields consolidated their recent moves.
Fed talk overnight tilted hawkish with the Fed’s Bullard advocating for two hikes in 2022 and also flagging the case for balance sheet unwind after tapering ends.
For Australia, population growth should begin to recover when international borders are re-opened (latest guidance is from mid 2022).
10yr Treasuries spend time above 1.50%. Neither equities nor USD seem to care….
Week ends quietly after Evergrande/FOMC related volatility earlier in the week
BoE meeting more hawkish than expected, seen opening door to hikes by year’s end.
Fed tees up November taper announcement, subject to reasonably good Sep. employment report
US equities fail to bounce after Monday, with the S&P500 down -0.1 ahead of the FOMC.
A torrid day for Hong Kong’s hang Seng index yesterday, driven by sharp fall in property sector stocks and led by a 16% fall in Evergrande ahead of Thursday’s bond coupon payment day, spilled over to the global arena on Monday with equities down sharply, bond yields lower and safe haven currencies in the ascendancy.
Caution is in the air ahead of the FOMC this week where market moves on Friday tiled towards a mildly hawkish outcome.
COVID 19 remains the main risk to the global economic outlook, while in Australia the key risks to our forecasts remain the timing and pace of the easing in restrictions, and further out, the underlying pace of growth as the impact of policy measures fades.
Insight
There have been quite a lot of moving parts to the price action overnight.
Strong economic growth in Q2 is set to falter in Q3.
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COVID restrictions hit retail in August, building on existing imbalances in China’s economy.
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The lift in equities appears to be a case of ‘buy the dip’ with an absence of any positive news flow apart from the very second-tier Empire Fed Manufacturing Survey which surprised sharply to the upside.
The market was looking for an ease in US CPI readings and in the end the figures delivered a bit more than expected
At the Fed’s annual Jackson Hole conference, markets understandably reacted to US Fed Chair Powell’s speech which effectively significantly divorced tapering from rate hikes.
It has been a slow start to the week with little in the way of market moves outside of commodities. Markets overall appear to be in a holding pattern ahead of US CPI figures tonight and the FOMC next week . The S&P500 swung between small gains and losses to finish up 0.2% after five consecutive days of losses, helped along by energy stocks.
After a positive APAC lead, equities came under pressure again on Friday night following news the Biden administration was considering a new investigation into Chinese subsidies and their damage to the US economy
As expected, the ECB will moderate its Pandemic Emergency Purchase Program (PEPP) bond buying pace in Q4 with its December meeting now a key event. China makes historic sale of oil reserves weighing on oil prices.
US equity markets slip for second day, bigger falls in Europe amid more cautious mood. NY Fed’s Williams re-enforces markets views post-Jackson Hole, August payrolls.
US investors have returned from the long weekend in a cautious mood. US and EU equities are broadly weaker with big tech outperforming, helping the NASDAQ stay on the green. Core yields are also higher with supply and ECB meeting on Thursday factors at play.
US markets being out for the Labor Day holiday hasn’t prevented global equity markets forging ahead. The US dollar has recouped a little of its (further) losses seen post last Friday’s US payrolls report and since AUD and NZD have been the two biggest beneficiaries of USD slippage of late, no great surprise they have lost a little more than most other currencies overnight.
US payrolls came in softer than the consensus (235k vs. 733k expected), but a soft print was widely expected given the weakness seen in high frequency indicators such as HomeBase. The surprise for markets was more on Average Hourly Earnings which were stronger than expected
We look at how the proposed Australia-UK Free Trade Agreement could mean new import and export opportunities. Watch now.
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In what have been predictably quiet bond and equity markets ahead of US payrolls tonight, currencies are continuing to enjoy their week in the sun.
Almost, but not quite, a round-trip for AUD/USD in August.
Ahead of US payrolls on Friday the decline in ADP private payrolls report overshadowed a better than expected ISM manufacturing print. The ADP miss points to downside risk to payrolls on Friday (the bad news), implying a likely delay to the Fed’s tapering decision (the good news).
Month end flows interrupt week-long USD depreciation trend but AUD and NZD have done enough work to suggest a base is now in after failing to take a hit from weak China PMI data.
In this Weekly we argue why we think activity should again rebound sharply once lockdown restrictions are eased. Key to how sharply activity can rebound is will people feel confident to resume activity and have household and business balance sheets been sufficiently insulated from recent outbreaks?
A quiet night with markets continuing to bask in the glow of Powell’s Jackson Hole speech. The explicit de linking of tapering to rate rises has allowed equity markets to rally, while yields have moved lower. The S&P500 rose 0.4% overnight and is up 1.3% since Jackson Hole on Friday.
The lack of a starting QE gun alongside a strong message that there is a stricter test for rate hikes compare to QE tapering resulted in a risk positive reaction to the much-awaited Fed Chair Powell’s Jackson Hole speech on Friday. A QE tapering decision remains live, although now November looks more likely than September.
Cautiousness has crept back into markets on the eve of Jackson Hole. Twin suicide attacks outside of Kabul airport has seen 12 US service members killed along with at least 60 Afghans. Coming up today, Fed Chair Powell gives his key mark address at Jackson Hole.
In a low trading environment, equities have edged higher again with procyclical sectors leading the way. The bond market continues to catch up to the positive vibes evident in other markets with core yields higher across the board.
Another day of equity gains and commodities prices. Markets are still basking in the glow of the Pfizer/BioNTech vaccine having received regulatory approval on Monday. China’s delta outbreak also appears to be under control with two consecutive days of no new domestic cases.
Risk assets have enjoyed a positive start to the new week with European and US equities extending Friday’s rebound. After a positive lead from Asia, European and US equities closed the Monday session with gains across the board, extending Friday’s rebound.
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.
Mid-morning in Friday’s US trading day, Bob Kaplan said he may rethink his call for the Fed to quickly start to taper its $120 billion per month in bond purchases if it looks like the spread of the coronavirus delta variant is slowing economic growth. This didn’t have a big impact on bonds, but we can date the start of the run-up in US equity indices and a pull back in the USD to his comments hitting the screens, testament to the ongoing sensitivity the currency and risk markets are exhibiting to the question of when QE tapering starts.
US equities recover into the close calming market sentiment. Spike in VIX and rotation into defensive/tech stock point to a cautionary tale. European equities cannot escape the negative vibes from Asia
Following a fair amount of volatility in the immediate wake of the FOMC Minutes US equities are lower, bond yields and the USD are lower, the latter allowing the AUD some relief after posting a new year-to-date low of 0.7229 in the run up to the Minutes, but the gains are already proving hard to hold.
Q2 NAB Commercial Property Survey shows confidence edged higher, but recovery will remain slow.
The negative vibes from our APAC session extended overnight with softer than expected US data releases not helping the cause. US retail sales were broadly softer, and the NAHB housing market index also came in weaker than expected.
Lockdowns in Australia are likely to have a very acute impact on the economy, much more than what the RBA had pencilled in only a week ago. While NAB still expects a sharp rebound in activity when restrictions ease, the near-term impact is likely to be larger with lockdowns extending beyond Sydney (e.g. NSW, Melbourne and ACT).
The much weaker than expected China data, lack of encouraging covid news over the weekend – no more so than in Australia – and the news out of Afghanistan which adds another dimension to ever-present geopolitical concerns (in this case, international terrorism) perennially cited as a risk to positive market sentiment – haven’t prevented the S&P 500 closing at a new record high.
China’s Delta outbreak likely to slow growth in the near term
Insight
US consumer sentiment plunges to below pre-pandemic levels with yields tumbling (US 10yr -8.2bps), but equities steady to higher with the S&P500 +0.2% to a new record high. For bonds, the plunge in consumer sentiment is an amber signal for the near-term, which if realised in real activity may impact on the timing and form of tapering and puts the focus squarely on retail sales on Tuesday
Due to lockdowns, we expect to see a large hit to activity in Australia in Q3. Our global growth forecast for 2021 is marginally weaker this month, 6.2% compared with 6.3% previously.
Insight
Quiet night but S&P 500 ekes out a third successive record daily close. Stronger than expected US PPI a reminder that supply chain disruptions are still with us.
US inflation moderates, taking the pressure down a notch and playing into the Fed’s transitory narrative. It’s no surprise to see yields and the USD lower in the wake. The US 10yr fell 1.5bps to 1.33%, though CPI was the catalyst for a larger fall after it reached an intra-day high of 1.3743%.
US Senate passes $550bn Infrastructure bill as expected but still a road ahead for passage by House. No positive covid developments overnight, but markets behaving as though there were. New record high for Eurostoxx 50, S&P500 closes flat, NASDAQ pressured by higher bond yields.
Markets opened with a cautious mood to start the week , reflecting on both the stellar US payrolls report on Friday and the surge in the delta variant which has seen China tighten restrictions and Israel contemplate another lockdown. The Fed’s Bostic was the first voter to speak post payrolls, indicating that the Fed should taper after one or two more payroll prints.
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.
Friday was all about US payrolls and the report did not disappoint. Along with solid employment gains, there were improvements in the other metrics of the US labour market edging us one step closer to a Fed tapering announcement. Market reaction to the data saw the UST curve bear steepened with the 10y UST Note testing 1.30% while the USD ended the day broadly stronger.
The S&P500 (+0.6%) hit another record high ahead of US Payrolls later tonight. Payrolls of course key to the Fed’s decision on the timing and pace of tapering (see Coming Up for details). Market moves elsewhere were more limited
Mixed US data and hawkish take on Fed Clarida shake markets. ADP is a big miss, US ISM a big hit.
The antipodean central banks are taking an optimistic view of the recovery with the RBA pushing ahead with its tapering of asset purchases (despite the protracted Sydney lockdown) and the RBNZ has as good as said the central bank will lift rates in August.
US equity markets have begun the new week in a tentative manner with a nervous feeling in the air. A slightly softer, but still elevated ISM print added fuel to peak growth concerns and the UST curve bull flattened.
The AUD failed to benefit from the generally weaker USD, in contrast to all other major currencies which rose during the last week of July. From mid-month, a very sharp fall-back in iron ore prices, albeit a commodity with a very fickle and sometimes non-existent short term relationship with the AUD, drew attention
Approaching the peak: China’s long-term coal consumption looks set to decline.
Insight
Lots of economic data to digest on Friday but none of which had a major impact on markets, while Saturday’s China official PMI data showing a further (and bigger than expected) fall in its Manufacturing Index threatens to play with the grain of recent AUD underperformance.
Q2 GDP growth below expectations but still strong.
Insight
US Q2 GDP was the data release to watch overnight and while the print missed expectations, a healthier US consumer that seemingly can’t get enough was the bright spot and carried the day.
A couple of comments from the Fed chair during the post-FOMC meeting Statement have been responsible for most of the market price action, notably, Powell’s remarks “we’re some ways away from substantial progress on jobs” and that “the Fed is nowhere near considering raising rates”.
For the first time, we are now seeing contagion from the sell-off in Hong Kong and US-listed Chinese shares, to global markets – the NASDAQ in particular, ending the day down 1.2% in front of the earnings results from Apple, Alphabet and Microsoft.
After an initial hint of contagion, European and US equities looked past Asian concerns over China’s regulatory crackdown, closing the day with modest gains at or near record highs. Meanwhile the real story in the rates markets has been the record move decline in the 10y US real rate.
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.
Strong earnings continue to outweigh Delta concerns with the S&P500 reaching a new record high, So far 87% of companies reporting have beaten expectations and if maintained would be the strongest earnings beat since 2008.
Monday’s delta blues are once again talking back-seat in driving markets, the winning streak in the major US stock indices extending to a third day as incoming quarterly earnings reports for the most part continue to beat expectations, the S&P500 closing within 0.4% of last Mondays record high.
Strong earnings have swept away Delta concerns in the US with 85% of companies reporting so far beating expectations.
The Delta variant continues to spread, vaccination rates have slowed, and case numbers are rising.
Markets have dipped sharply on the back of rising COVID cases.
The Sydney lockdown is now in its fourth week with restrictions tightened further on the weekend. In this Weekly we update our estimates of the impact of these recent lockdowns.
The Aussie dollar is under pressure because of global market uncertainty over COVID says NAB’s Rodrigo Catril on today’s podcast.
COVID-19 remains the most significant risk for our global outlook. While in Australia, the current virus outbreak in NSW and associated lockdowns/border closures highlights the uncertainty around economic forecasting at present.
Insight
China’s economy grew largely as expected in Q2, but imbalance between production and consumption persists.
Insight
There’s more caution in the markets today, even though numbers out of Australia, the US and China were better than expected. There’s a bit of battle fatigue hitting the market says NAB’s David de Garis.
More inflation signals with the RBNZ moving towards rate rises. NAB’s Gavin Friend says there are no signs that other central banks will be following in a hurry.
US inflation has surprised again, up even higher than last month. But NAB’s Tapas Strickland says the indications are that it’s still transitory.
One, two, three: Can China counter its demographic drag by raising its birth rate?
Insight
There are now less than two unemployed people for every job vacancy in Australia, a record low for this ratio.
Following a positive lead from Asia, US and EU equities have kick started the new week with a positive tone.
A swift turnaround in market sentiment on Friday. NAB’s Ray Attrill provides some of the reasons.
The ECB’S new strategy has driven the Euro higher in a market which has generally been driven down by COVID concerns. NAB’s David de Garis explains what’s changed in the ECB’s 2% inflation target.
The FOMC minutes did little for cautious markets. NAB’s Gavin Friend says the outcome of the ECB’s Strategic Review should hold more interest.
The RBA is focused on data not dates, says NAB’s Rodrigo Catril in today’s Morning Call. It’s data from the US and Germany that’s added caution to markets overnight, along with rising concerns about China.
What follows the QE2 in September? NAB’s Ray Attrill says the market is expecting a flexible target, but that we can expect a ripple of surprises from the RBA today.
The Fed will not see the need to act swiftly after Friday’s payrolls numbers, but it will be a different story for thew RBA tomorrow. NAB’s Tapas Strickland says, given the improvements in the Australian economy, the need to run QE at $100 billion every six months is not there anymore.
The AUD traded in a wider range in June relative to May
Despite lots of data for markets to chew over, they are looking for a directional lead from non-farm payrolls, says NAB’s Gavin Friend. Whether they’ll get it or not is the question.
It’s been a scratchy session, says NAB’s David de Garis, as markets shy away from sharp moves ahead of Friday’s payrolls data from the US.
Reopening and vaccines are helping economies, but the Delta variant is still a concern for markets says NAB’s Rodrigo Catril, explaining today’s sideways moves.
Risk appetite retreats a little ahead of the non-farm payrolls on Friday and with the Delta strain delaying the reopening of economies, says NAB’s Tapas Strickland on today’s Morning Call podcast.
Fed – Still dovish but less than previously thought.
Insight
The impact of the latest lockdown and Biden’s stimulus backflip. NAB’s Ray Attrill on two bits of news for markets to respond to this morning.
Equities driven higher by Biden’s infrastructure plan deal. NAB’s Gavin Friend says bond markets were unmoved by Fed speakers suggesting higher inflation for longer and rate rises sooner.
Bond yields are back to where they were before the FOMC meeting, says NABs David de Garis, with the focus now back on the reflation trade.
The global reflation trade is not dead, says NAB’s Ray Attrill, as Fed speakers help markets further unwind their response to last week’s FOMC.
Last week’s post FOMC sell-off was overdone, says NAB’s Tapas Strickland on today’s Morning Call podcast, evidenced by a big reversal overnight. Although markets remain jittery.
The US dollar continued to rise at the end of last week hitting a two-month high after the surprisingly bullish outlook from the Fed, but is the Aussie dollar paying too high a price?
Buyers beware: China’s consumers have remained subdued during the COVID-19 recovery.
Insight
The US dollar continued to rise yesterday, after the hawkish comments from the Fed.
Growth slowing as base effects wash away; consumers continue to lag industry.
Insight
At the FOMC meeting this morning the Fed upped their growth and inflation forecasts, with the dot plots pointing to rate rises as soon as 2023.
The FOMC meeting is tonight and markets are being cautious, with little movement in bonds or equities. A weaker than expected set of retail sales numbers has added to the uncertainty.
Oil has hit a two-year high.
US CPI was a higher than expected but the Market seems to have taken it largely in its stride.
Bond yields have fallen further overnight, in some cases to levels not seen for several months.
Bond yields are pushing lower and market volatility is easing.
If non-farm payrolls gave markets a Goldilocks moment on Friday then maybe markets are already starting to question whether it was exactly what was needed.
Not too good, not too bad, that seems to have been the market response to the non-farm payrolls numbers out of the US on Friday.
There was speculation that the Fed would taper sooner rather than later.
May was the lowest volatility month so far in 2021.
If there’s one takeout from the Fed’s Beige Book overnight, aside from the continued improvement in the US recovery, it was the rising concern about input costs.
The RBA didn’t steer from its earlier stance that it was too soon to be looking at any changes in policy right now.
Q2 growth still looking strong; April inflation surprise.
Insight
The rising Yuan is clearly a concern for the PBoC who announced measures to tackle it, whilst Chinese authorities are now permitting families to have three children.
It was an early start to month-end on Friday, with the US and UK off on holiday today.
Three central bankers argued for a more rapid tightening of monetary policy overnight.
The RBNZ surprised many yesterday by indicating there could be an interest rate rise as soon as next year.
The US dollar has fallen again with rises in the Euro and a shift up in the Yuan, but will it stick?
Equities are back on the rise and bond yields are falling, slightly, as investors seem to have accepted the line of most central banks that inflation is only transitory.
The Euro lost ground on Friday as President Lagarde refused to commit to any schedule for talking tapering.
Equities bounced back in the US and Europe as markets re-evaluated the comments about the timing of tapering in this week’s FOMC minutes.
The FOMC minutes gave away more than expected with the Fed suggesting it might be appropriate at some point to discuss a plan to adjust the pace of asset purchases if the economic recovery continues.
It’s been a mixed session for US equities overnight whilst bonds headed sideways.
Smaller base effects meant smaller growth rates in April but retail sales are still lagging.
Insight
US shares fell as investors once again weighed up inflation concerns.
Share markets are riding high again in the US despite a triple whammy of disappointing reports.
USA equities came bouncing back after yesterday’s sharp response to the higher than anticipated CPI numbers.
US CPI numbers came in on the high side and markets have reacted swiftly with equities falling sharply and the bond sell-off pushing Treasury yields up.
The risk off mood is being driven by increasing inflation concerns.
Inflation expectations continues to influence markets.
US non-farm payrolls markedly undershot market expectations on Friday with just 266k more people in work versus the expectation of close to one million.
The Bank of England has upped its forecasts for the growth of the UK economy this year – from 5 percent a few months ago, up to 7.25 percent.
The Fed’s board continues to talk down the prospect of tapering, pushing the argument that price rises will be transitory.
Demand is outstripping supply on both sides of the Atlantic.
Buy, buy, bye: political tensions could impact Australia’s trade relationship with China.
Insight
The AUD/USD traded in a 2.86c range in April with a low of 0.7532 recorded on the first day of the month while a high of 0.7818 printed on April 29.
Markets turned a little sour at the end of the week.
GDP growth off to a good start in early 2021 and set to accelerate.
Insight
It’s been a choppy session for US stocks, even though the news on the economy was largely positive and earnings results have been strong.
The NAB Commercial Property Index lifted for the third straight quarter, but remained negative and well below average.
Insight
“long ways to go” is the Fed’s Jerome Powell’s take on the path to recovery for the American economy and the reason that rates won’t be lifting anytime soon.
Markets are treading water ahead of the FOMC meeting tomorrow morning.
Equities are on the rise again as risk sentiment rises following largely positive data.
A new podcast series to help small to medium sized businesses make sense of current market movements.
Markets were on a positive frame of mind at the end of the week,
Shares in the US have fallen on news of a planned sizeable hike in capital gains for wealthy Americans.
The Canadian dollar has been boosted by the Bank of Canada markedly increasing their growth forecasts for this year
There’s a cautious mood in the markets right now.
远期合约能够帮助企业控制成本且锁定企业的预算外汇汇率,本文通过例举三个被普遍使用的远期合约策略来阐述进口商们是如何通过这些策略来管理企业的外汇风险
US equities dipped a little overnight, pulling back from record highs.
There’s still plenty of positive sentiment around as the US, UK and Europe continue to vaccinate at pace.
Quarterly data point to weak start to 2021, but signs of consumers returning is positive.
Insight
High frequency indicators continue to point to a recovery in the global economy in early 2021. In Australia, the economic recovery continues at a brisk pace with forward indicators pointing toward ongoing strength in activity and the labour market, even as some fiscal support is wound back.
Insight
The news was largely positive overnight.
Equities came back off the highs we saw on Tuesday/Wednesday, but their decline didn’t reflect the sentiment in the market.
It’s been a session with mixed messages.
It’s been a fairly quiet session overnight.
Equities in the US finished Friday on new highs.
Australia has become the latest nation to express concern about the use of the Astra Zeneca vaccines on young people, except here young is anyone under 50.
It’s been one of the quietest sessions for some time.
There were no significant market moves overnight.
Don’t forget about me: lower skilled workers could be left behind by manufacturing’s evolution
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The AUD/USD averaged almost exactly 0.77 over the month.
A new podcast series to help small to medium sized businesses make sense of current market movements.
US equities have been boosted by a string of positive data.
US 10 year Treasury yields hit a 14 month high overnight, as the US dollar rose higher.
Early in the session the fire-sale of $20 billion of stocks held by Archegos Capital was all everyone was talking about.
There was quite a bit of optimism in the air on Friday as we career towards the end of the month and the end of the quarter this week.
It’s been another mixed session.
Autumn rain lifts EYCI outlook in the short-term.
Insight
Even though countries are pressing ahead with vaccine role outs, the speed of recovery might be slower than envisaged.
2021 should be a year of strong growth
Insight
Market sentiment has switched in the last 24 hours, with concerns that the economic recovery from COVID-19 might be slower than anticipated.
There were big rises in US shares overnight, with the NASDAQ rising 1.7% in this session, helped by a moderate fall in Treasury yields.
The Fed will push on with ending its lower capital requirements held against Treasurys, sticking with a schedule that will see the so-called supplementary-leverage ratio (SLR) ending on 31st March.
This podcast focuses on the Japanese Yen – what’s been happening over the last 12 months and NAB’s forecast.
There was more reaction to the FOMC meeting with bond yields rising sharply.
The Fed has upped its growth expectations for the US economy, driven by the fiscal support and the vaccine rollout.
There wasn’t much movement in shares, bond yields or currencies overnight, despite weaker retail numbers out of the US.
The fear of blood clots from injections means use of the Astra Zeneca vaccine has been suspended in an increasing number of European countries.
Don’t be fooled by surging annual growth rates – momentum is set to slow across 2021.
Insight
Bonds yields rose sharply again on Friday, with 10 year Treasuries reaching their highest level since February last year.
Rising restrictions to combat a resurgence in the spread of COVID-19 towards the end of 2020 slowed the global recovery but did not derail it. In Australia, the economy continues to recover at a rapid pace.
Insight
Asset markets continue to be drawn by bond markets.
The story of the day was the softer US inflation numbers which saw yields pull back and helped stocks rise.
COVID-19 continues to present some uncertainty around the outlook, particularly with the rollout of vaccines to emerging markets lagging that of advanced economies.
Insight
Shares have reverted to a focus on tech in the US with a sharp rise in tech stocks.
US Treasury yields pushed steadily higher overnight, reaching 1.6 percent for 10 year Treasuries.
The US senate has passed the $1.9 trillion stimulus package, so it will almost certainly become law this week.
Bond yields are on the rise, in the US and in Australia – for very similar reasons.
Bond yield have been rising sharply overnight.
Leaders in conversation on the Road to COP 26 and Beyond.
All eyes will be on Australia’s GDP read this morning, which Ray Attrill says is expected to be close to 3% growth QoQ, driven by consumer spending.
The RBA might have left itself with very little to say today, having upped their bond buying in response to the sharp rise in yields last week.
Digital divorce: forces are pushing for a technology split from China.
Insight
Friday saw a reversal in the bond sell-offs earlier in the week, seeing 10 year yields in the US falling back top 1.4%.
Despite the increasing dovishness of central bankers the markets have been selling government bonds like they are going out of fashion.
Central bankers are fighting amongst themselves as to who can sound the most dovish.
2021 set to be a year of very strong growth.
Insight
Many believe the RBA didn’t go far enough on Monday, buying up a $1 billion of bond purchases in the face of sharply rising bond yields.
Australian 10 year bond yields have nudged 1.65 percent for the first time since May 2019.
There was a big rise in the Aussie dollar and the pound on Friday, both reaching multi-year highs.
There have been big falls in US equities overnight after higher than anticipated jobless claims, showing its not a smooth recovery for the US.
While NAB’s Commercial Property Index lifted for the second straight quarter, it was still weak and well below average.
Insight
There was a strong bounce back in US retail sales in January.
Equities were mixed in the US overnight, but the S&P 500 did manage to claw out a new record high, whilst the NASDAQ fell.
America has been off work for Presidents Day, but that hasn’t stopped markets optimistically looking to a world where COVID-19 isn’t centre stage.
There’s absolutely no surprise that Donald Trump has been acquitted in Washington,
The resurgence of COVID-19 in many parts of the world towards the end of 2020, has had a negative impact on the global recovery. Whereas in Australia, economic activity continues to rebound strongly.
Insight
It’s been a relatively quiet 24 hours with only slight market moves
Markets have been fairly subdued on the back of soft inflation numbers in the US, and as investors hold off for any revelations from Jerome Powell as he addresses the Economic Club of New York.
A range of key commodity prices rose in January.
Insight
The Euro gained on two fronts overnight.
Janet Yellen shrugged off concerns about the Biden stimulus package unleashing inflation on the US economy.
Friday’s non-farm payrolls numbers in the US surprised on the downside.
The UK and the US are well ahead of Europe on vaccine rollouts, and that seems to be the major focus of markets right now.
New Zealand’s labour force data yesterday showed a strong fall in unemployment, possibly down to NAIRU levels.
All eyes and ears will be on Philip Lowe’s speech today, following the very dovish outlook from the RBA yesterday.
In normal times an episode like the Reddit induced short squeeze would eventually see markets return to normal.
Meet the new boss: a Biden Administration doesn’t mean a return to Obama-era China policy.
Insight
Equities were hit hard on Friday as the Reddit warriors made their mark.
Recovery lost momentum at end of 2020; hope for a better 2021
Insight
US equities have bounced back after a day influenced by speculative trading on retail platforms with investors spurred on by chatter on Reddit.
The markets have so far been unmoved by the FOMC announcement, perhaps because it said so little.
The IMF has upped their forecasts for global growth but, as Tapas Strickland suggests on this morning’s podcast, markets don’t tend to pay a lot of attention to these numbers
Markets turned sharply to a risk-off mood at the end of last week, on the realisation that vaccine roll outs will take longer than hoped whilst infections are growing.
The ECB changed nothing overnight, with President Lagarde saying risks remained on the downside.
New highs on the NASDAQ and S&P500.
It’s Inauguration Day, or it will be when Wednesday eventually ticks round in the US.
Markets are looking through the prospect on any unrest on inauguration day, but the more immediate question is what will the President do today?
China’s economy enters 2021 with momentum, but expected to slow across the year.
Insight
Markets responded at the end of the week to Joe Biden’s proposals for stimulating the US economy.
Bond yields were already on the rise before Fed chairman Jerome Powell talked down the likelihood of any easing in bond purchases this year.
An ensuing impeachment of the US President continues to be of little concern to the markets.
With yields rising there’s been a question mark over whether the appetite for treasury bonds is falling.
Bond yields continue to rise in the US as markets prepare for an expected multi-trillion dollar stimulus package from the President-elect.
The Morning Call is back, and the new year has kicked off pretty much where we left off.
You might have expected a positive market response as the US politicians reach agreement on a fiscal stimulus bill, particularly as Europe became the latest region to approve a vaccine.
There’s a strong expectation that the US fiscal stimulus deal will be resolved in the next few hours.
What do alternative indicators suggest about China’s COVID-19 downturn and recovery?
Insight
The post-Brexit trade deal and the US fiscal stimulus deal have been pushed back time and time again, but we really are at the point of no return.
There's rising hopes that a US fiscal stimulus deal is imminent.
China’s consumers finally remerging
Insight
Equities have climbed higher in the US and Europe on the hopes two deals will be struck this week.
The markets lost some of their mojo today.
Signs of slowing, but vaccine a positive
Insight
The inoculation program in the US has ambitious targets.
Globally GDP rebounded strongly across all the major advanced economies in Q3, however the spread of COVID-19 remains a key risk to the outlook. In Australia our outlook now resembles the best-case scenario we outlined at the start of the pandemic, although large uncertainties remain, even with a vaccine seemingly close to being rolled out.
Insight
Even though a hard deadline has been set for Sunday for the UK-EU trade deal, there’s no guarantee it will all end there.
Ursula von der Leyen and Boris Johnson have been meeting over dinner to discuss the progress of the UK-EU trade deal.
Markets have been buoyed by positive COVID-19 vaccine news, which could correspond with stronger economic activity and demand for commodities next year.
Insight
The UK has started injecting people with the COVID vaccine. If only they could inject compromise in the UK and EU negotiators who remain a long way from reaching a deal.
The UK-EU trade deal really is going right down to the wire – and the wire itself keeps getting pushed back.
US equities reached new highs again on Friday even though the jobs numbers were lower than anticipated.
OPEC+ has struck a deal to slowly increase oil production from next month, rather than letting the production cuts fall off a cliff.
The pound has taken a sharp hit as Brexit talks don’t seem to have progressed much at all.
There’s a positive vibe about this morning, pushing equities higher and Treasury yields have seen a sharp rise too.
The US dollar was losing ground for most of the session before a sudden reversal that knocked the Euro off a multi-year high.
The pound has already recovered the losses it made on Friday, when Brexit rhetoric was ramped up on both sides of the English Channel.
The ECB’s Philip Lane expressed concern about the tightening of credit standards which could impede the European recovery.
The COVID-led economic downturn continued to weigh heavily on commercial property market sentiment in Q3.
Insight
It’s Thanksgiving today in the US and markets have been cautious ahead of the holidays.
New positivity with the Dow breaking 30,000 for the first time, due in part to hopes for; a vaccine and a peaceful transition for the Biden administration.
Astra Zeneca announced the results of their trials, with efficacy up to 90 percent with a drug that is cheaper to produce and easier to distribute.
NAB has revised its forecasts for growth in the Australia economy.
The markets are more focused on the short-term economic hit of lockdowns than the longer-term vaccine fuelled positive outlook.
Markets continue to be torn between the good news and the bad news.
There was no new vaccine news overnight and the markets seemed a little disappointed by that, with equities down and a move to government bonds.
Q3 bounce; but COVID-19 risks remain
Insight
Markets have been lifted higher on further vaccine news, with Moderna saying their trials have shown 94.5 percent effectiveness.
Consumers gradually returning to the market, with China still reliant on industry.
Insight
2020-21 on track to deliver above average winter crop.
Insight
Last week was a volatile one, but markets enthusiasm stemming from the hope of a vaccine led the charge, with some shifting of focus on equity markets.
COVID-19 remains a major factor influencing the global economy. While in Australia the RBA has lowered rates to a record low of 0.1% and announced a QE program.
Podcast
This week’s earlier optimism over a possible vaccine for COVID-19 has disappeared completely, with equities falling and bond prices rising.
After two steps forward, European lockdowns are a step back for the recovery.
Podcast
Even though the markets continue to respond positively to the hope of a vaccine, central bankers seem to be taking a more cautious tone.
October was another mixed month in commodity markets.
Insight
Those vaccine hopes continue today, even though there were warnings from Fed officials that the economy still faced ongoing impacts from COVID-19, with structural differences highlighting the need for the fiscal stimulus that now seems unlikely to happen this year.
The markets have scarcely had time to respond to the news that Joe Biden is the next President of the United States than we’re it with the (potentially bigger) news that Pfizer have successfully completed stage three of their COVID-19 vaccine trials, with an astonishing 90% success rate.
There’s still an outside chance that in January the Democrats could take control of the Senate.
Markets have adopted a risk-on stance with the hope that there'll be fiscal stimulus to counter the impacts of COVID-19.
US equities have climbed as the US goes through Wednesday without a clear winner in the election.
The RBA announced cuts to interest rates and a $100bn bond buying program yesterday.
Markets flipped from Friday’s share and bond sell-off, with more optimism a day or two out from what is expected to be a Biden victory.
China looking inward as the external environment has deteriorated.
After the markets finished with a strong equities and bond sell-off on Friday, expect a busy week, with the RBA, the Fed and Bank of England all meeting, with the difficult job of determining how to see the economy through rising infection numbers.
Markets turned around again with equities rising sharply.
Markets have been hit by concerns over COVID-19 and the US election aftermath.
There’s a risk that next week’s US election is more contestable than we might have considered a week ago.
Markets are displaying classic risk-off moves today – with equities down, bond prices up and the US dollar the safe haven currency of choice.
Last week finished with US stocks down, the US dollar down and the price of bonds down.
In a few hours Joe Biden and Donald Trump go head to head in the last election debate.
Sustained large budget deficits likely regardless of the victor, with Biden the frontrunner.
Insight
Talks are back on.
Equities are higher in the US today.
Markets are waiting to see the outcome of two on again off again decisions, both with sizeable economic consequences.
China’s recovery remains industrial led, but consumers are finally emerging.
Insight
After a fairly volatile week markets were calmer on Friday on the back of positive retail numbers from the US.
There’s a strong risk off mood in the air, which has pushed the US dollar higher and hit stocks.
Philip Lowe, the Governor of the RBA, is talking this morning.
Trends in global commodity prices remain mixed.
Insight
The Aussie dollar has taken a hit twice in the last twenty-four hours.
COVID-19 put the brakes on already stalling foreign investment.
Insight
The US Senate is seemingly preoccupied with pushing through Amy Coney Barrett as Supreme Court nominee, casting aside any bandwidth for fiscal stimulus talks.
The US dollar hit a two and a half year low on Friday, whilst the Chinese Yuan showed big gains.
Donald Trump continues to talk about a stimulus deal, even though he said it had been shelved.
There’s been a market rebound on the hope that some sort of stimulus deal in the US is still possible before the election.
There’s been a strong reaction in the equity and currency markets to Donald Trump’s sudden decision to stop talks about a fiscal stimulus, even though he tweeted about the need for it whilst in hospital over the weekend.
As the President prepares to leave for the White House there’s still hope that a deal will be reached to pass version 2 of the Heroes Act, adding more stimulus to the US economy.
Friday was certainly a gamechanger. The US President went into hospital without a clear picture of his condition. Now, it seems he could be returning to the White House as soon as today. So, do the markets take back some of their risk concerns, and focus on the positives of the situation?
Equities in the US rose overnight despite a stalemate on the fiscal stimulus package.
Equities have been helped by some strong data from the US and continued hope on a stimulus deal.
Despite a big jump in confidence in the Conference Board numbers for the US, there’s not much optimism in the markets today.
US and European equities rose sharply, with rising confidence seeing a fall in the US dollar and a rise in the Aussie.
COVID19 cases continue to rise in Europe, with numbers in the UK and France now well above the first wave.
Recovery continues, but risks remain.
Insight
Equities were rising again in the US overnight on the hopes that a stimulus deal would be struck between the GOP and Democrats, but as optimism turned to reality, prices fell, the US dollar regained some of its strength and bond yields weakened.
NAB had forecast that the Aussie dollar would reach 74 US cents by the end of the year. It did earlier this month but, as global risk sentiment rises, it is rapidly losing ground.
In the US Jerome Powell spelt out very clearly in his testimony before Congress that more fiscal stimulus was needed and had been assumed by many board members in their policy predictions.
Concerns over the impact of a second wave in the US and Europe seem to be gathering momentum, driving investors to government bonds and safe-haven currencies.
What more can central banks do to help stabilise the global economy?
It’s been a topsy turvy session overnight.
US interest rates will be lower for longer – that’s the takeout from today’s FOMC meeting.
Will Chinese manufacturers lose in the post-COVID world?
Insight
US equities are on the rise again driven by a flurry of M&A activity, alongside vaccine hopes and reasonable activity numbers from China.
China’s industrial sector still driving the recovery, with consumers lagging.
Insight
Shares climbed in the US on the hope Pfizer will have a vaccine ready by the end of the year.
It’s just over six months since the COVID-19 pandemic was declared and we’re still unsure about how it will all end.
Globally, after massive falls in GDP in Q2 across the advanced economies, the latest indicators are pointing to a substantial, but incomplete, Q3 rebound. In Australia, GDP fell by 7% in Q2 – the largest fall in the history of the quarterly national accounts.
Insight
The pound lost further ground today as the EU objected to a new government bill that would unilaterally overturn the Withdrawal Agreement.
Economic rebound in Q3, but signs that growth momentum is slowing.
Podcast
There’s been a rebound in risk sentiment.
At a high level, commodity prices broadly strengthened in August (with coal and gold the notable exceptions).
US equities have had a third session with substantial falls.
A drop in the pound was the only significant market move overnight.
US jobs data on Friday helped the equities market to regain a little composure as it fell for the second day.
There have been massive falls in US equities, particularly tech stocks.
The US dollar managed a slight recovery which has also seen continued growth in US equities.
Deflation in Europe comes as no surprise but the markets are still adjusting to the shift in the Fed’s monetary policy.
The Australian and NZ dollars reached two-year highs in the overnight session.
Growth is set to bounce back in Q3, but the recovery lost momentum through July/August.
Insight
The US dollar bore the brunt of Friday’s reflective thinking on Jerome Powell’s Jackson Hole speech.
Jerome Powell used his virtual address to the Jackson Hole Symposium to announce the Fed’s strategy of targeting an ‘average’ 2% inflation rate
There’s continued optimism in the markets with equities reaching new highs again.
The US dollar is down again with equities up and touching new highs again.
US equities reached new highs again, with big gains also in Europe.
Europe’s PMI’s disappointed markets on Friday, whereas the US numbers were better than expected.
US equities continue to rise, even though the jobless claims numbers rose last week.
There was disappointment from investors after the minutes of the recent FOMC meeting were released.
US stocks continue to rise to record highs, helped today by strong housing starts and building permits.
The US dollar continues to fall, pushing the Aussie dollar higher this morning.
Demand fundamentals limiting outlook for wool.
Insight
US-China trade talks have been called off for the foreseeable future with little market impact.
The global economy continues to recover from the impact of COVID-19. However, there is still a long way back with progress. In Australia, we have downgraded our forecasts due to the containment measures in Victoria.
Podcast
Jobs data is confusing right now. How much is it influenced by government stimulus activity?
Global recovery continues but it is uneven and still a long way back to ‘normal’.
Insight
US equities continue to race upwards, at or near record highs.
Commodity markets have continued to display differing trends.
Insight
Markets in Europe seem to have been encouraged by the news that Russia is to start vaccinating key workers in the next few weeks.
The latest JOLTs (job openings) showed there are 5.9 million jobs available, more than expected, but it didn’t give markets any kick.
Trump’s executive orders hit technology stocks in the US and China on Friday.
President Trump has indicated if no stimulus deal is reached he’ll use his executive powers.
Gold has broken the $2,000/ounce mark, so is it making a run for it?
Treasury bond yields are reaching new lows which has heightened the appetite for gold.
Mixed signals – some risks from China’s incomplete recovery.
Insight
There was a lot of optimism in the markets overnight, driven by strong manufacturing numbers in the US and Europe.
The Australian economy will take a hit from the stage four lockdown in Melbourne, but it’s not alone.
Massive fall in Q2 GDP.
Insight
The US dollar continued to slide, with a fall in shares and US Treasury yields, as GDP numbers showed the extent of the shock to the US economy in Q2.
“We’re in a tough situation” – that was the response from Jerome Powell to one question during the FOMC press conference this morning.
The US is no nearer to reaching agreement on their fiscal stimulus package.
Gold has reached a record high, whilst the US dollar continues to slide.
The US dollar lost a lot of ground last week as Congress argued over the shape and form of the next recovery package.
It's been a classic risk-off session so far, at least in the second half.
Europe's done it, Australia's done it. Now it's the US' turn to extend their fiscal support, and the deadline is looming.
A look at how corporate purpose, responsible investment and government leadership are driving greater outcomes for the economy, environment and society.
The COVID-19 led economic slowdown had a major impact on commercial market sentiment in Q2.
Insight
Long term pain – could the COVID-19 recovery disrupt SOE reform?
Insight
The Aussie dollar rose over 1.7 percent, helped by the gain in the Euro after leaders there reached an agreement on a European Rescue Plan.
Scott Morrison will unveil changes to the JobKeeper and JobSeeker programs today
After three days debating the size and shape of the European Recovery Plan, EU leaders failed to reach an agreement.
There's been a lot of employment numbers out over the last 24 hours – for the US, the UK and Australia.
China’s old economy drives growth to unexpected high in Q2.
Insight
Global recovery continues but virus outbreaks a major risk.
Insight
There’s another possibly shape – the W recovery.
A number of commodity markets saw stronger prices in June –particularly base metals, gold and oil.
Insight
The Euro’s rise is based on hopes that European leaders will reach a consensus on their rescue package this week.
Equities in the US spent most of the session rising, driven by the news that Pfizer and BioNTech’s experimental vaccine has being fast tracked in the US.
Markets opted to take the positive news on Friday, sending shares higher and the US dollar lower.
Markets are split between the confidence things might be getting better versus the realisation that in the US southern states infection rates (and fatalities) are getting worse.
The UK government going halves on lunch if you eat out in the first half of the week.
There isn’t an immense amount of confidence about how quickly economies will recover.
Everyone is seeing the silver lining, but clouds could be forming.
Which way will the markets be pulled this week?
The US President declares the economy is roaring back following 4.8 million new jobs in June.
The overnight session started on a sour note over increasing concerns about Hong Kong.
Dr Fauci has declared the virus as ‘out of control’ in the US and more measures need to be brought in to contain it.
There’s a little positive sentiment pushing shares higher again today and helping the US dollar gain on the Yen and Swiss Franc.
Rising infection rates in US southern states hit equities hard on Friday.
The easing of banks’ investment rules contained in the so-called ‘Volcker Rule’ has helped to boost stocks.
May rebound, but virus spread a risk.
Insight
Markets have been hit with a triple whammy – disturbing COVID-19 numbers emerging from the United States, a worse than expected downgrade to global growth forecasts and a big rise in oil inventories.
There’s a lot of positive sentiment again today, with US equities on the up and the NASDAQ reaching a new high.
In a day that’s been light on news, markets have had a chance to take a more positive outlook, pushing equities higher and the US dollar lower.
Last week was a choppy week as markets tried to balance out positive economic news against rising concerns about COVID-19 infections.
Markets continue to be jittery, with news of reopenings offset by concern over rising infection rates.
Australia’s latest unemployment numbers are out this morning and the rate is expected to rise.
Market sentiment is higher again this morning from a surprise rebound in US retail sales, coupled with talk of a $1 trillion infrastructure program from the Trump administration.
Globally equities had been dampened on Monday morning but equities are back on the rise in the US.
Suppliers are still searching for demand.
Insight
The markets lost a chunk of optimism last week.
There’s been a swift move to bonds and safe haven currencies since the Fed’s message yesterday that it would take a couple of years at least for life to return to normal.
Long climb back to ‘normal’ levels of global activity has started.
Insight
The US Fed has reiterated that they will do whatever it takes to protect the US economy, with inflation expected to remain below 2 percent through to 2022.
Trends across commodity markets were mixed in May.
Insight
The rally in equities has stalled for now – except for the NASDAQ.
Equity markets continue to rise and the US dollar continues to weaken with increasing risk-on sentiment.
The ECB announced it will extend its bond buying program by a further €600b.
Modest Chinese stimulus highlights competing policy objectives.
Insight
Australia has entered a recession but, as Josh Frydenberg was quick to point out yesterday, the Q1 fall in GDP was miniscule compared to most of the rest of the world.
It’s all good news as far as the markets are concerned, pushing the Aussie dollar even higher.
The Australian dollar has climbed even higher this morning, reaching 68 US cents.
We’re seeing iron ore prices rise largely because of concerns over supply from Brazil.
US equities continued to rally as investors looked for signs the economy would be getting back on track. But then …
The Australian dollar has lost ground as China threatened to ban imports of Australian coal.
There’s a strong risk-on mood in the markets this morning.
April crash, tentative recovery in May.
Equities have staged a broad-based rebound and are expected to continue as markets reopen in the US and UK.
Podcast
The unrest in Hong Kong is likely to impact the Australian dollar.
Market sentiment was tempered somewhat by rising rhetoric between the US and China.
It’s been another positive session, driving equities higher and giving another boost to the Australian dollar.
Markets have controlled their excitement after the burst of optimism over a potential COVID-19 vaccine.
There’s been big increases in equity markets and bond yields on news of a successful stage one vaccine trial in the US.
The US President has said the US needs to get back to work, vaccine or not.
The latest economic data from China continues to highlight some challenges in its recovery phase.
The US and Australia have both reported dour job numbers, although markets were braced to expect it.
A massive contraction in global activity has occurred due to COVID-19.
The Fed’s Governor Jerome Powell took a very sombre tone about the response to the COVID-19 crisis.
Commodity prices generally fell in April – with particularly steep falls in oil and LNG markets, along with declines in iron ore and coal.
There’s been a swift reversal in sentiment.
When we’ve had positive risk sentiment in the past we’ve tended to see a stronger Aussie dollar but that’s not the case today.
Export channels offer little opportunity as China attempts to recover.
The non-farm payrolls data on Friday showed 20.5 million new job losses in one month in the US and yet equities rose
Future contracts for Fed funds turned negative for the first time.
Two questions remain over the COVID-19 crisis: when is it safe to lift lockdowns and what will the debt-impact be on the economy?
The NAB Commercial Property Index fell 8 points to a below average 0 in the March quarter.
The Euro and Italian bonds took a hit with German judges challenging the ECB on its QE activity.
Airline stocks have taken a heavy hit after Warren Buffet’s decision to bail out at the weekend.
May got off to a bad start on Friday with falls in equities and the Aussie dollar the worst currency on the day.
Month-end has seen a broad sell-off of the US dollar.
Q1 GDP falls as US goes into recession
Fed warns of considerable medium-term risk.
The Aussie dollar has been steadily rising, now around 65 US cents.
Again, it seems markets are ignoring the bad data of which there’s plenty.
There’s still talk of a v-shaped recovery in the US.
US unemployment registrations have added another 4.4 million, European PMIs hit record lows and the EU failed to reach an agreement on how to fund a recovery package for Europe.
Shutdown and restart – will China’s consumers return to support growth?
Oil prices have recovered somewhat and equities have risen again.
Oil rout sours risk sentiment across the board.
WTI lurched into negative territory with a vengeance.
China’s economy sharply contracted in Q1; weakest growth in over forty years in 2020.
Industrial production numbers from China on Friday gave investors hope.
The global economy is in a deep recession due to the rapid and widespread escalation in Covid-19 containment measures since mid-March. While the domestic economy is now expected to see a contraction of an unprecedented speed and magnitude.
Another 5.2 million jobless in the US.
March data out of the US is bad and the share market has taken it badly.
Overall, the global economic outlook has deteriorated since last month, with the downturn expected to far exceed the Global Financial Crisis.
Australia joined the bull run in the share market yesterday, clocking up 20.7 percent growth since March 23.
The US Fed has extended its QE shopping list, agreeing to buy junk bonds from corporations suffering the impacts of the coronavirus.
There’s more optimism today that countries are reaching the peak of COVID-19, which is pushing US equities higher.
Optimism is being driven by the infection and fatality curves for COVID-19 in Europe and the US.
Equities have bounced back in a big way on hope that countries will start to ease restrictions and get more people back to work.
Hope is a rare commodity these days – unlike oil.
Oil shot up in price overnight.
The quarter has started with big falls again on equity markets and lower Treasury yields, whilst oil prices continue to be driven downwards.
Equities in Europe are on the rise. Equities in the US are on the slide.
Scott Morrison’s job retention program helped equities yesterday but doesn’t explain the rise in the US and Europe.
Other parts of the world are getting ready for a lockdown that could last a few months.
Back in business? China attempts to restart its economy after Covid-19 shutdown
US equities rose sharply overnight despite the news unemployment claims in the US have risen to 3.2 million for the week to March 21.
Equities are on the rise in the US and Europe.
Markets reversed a little overnight with US and European equities rising.
The US Fed announces unlimited QE.
The US economy is undergoing a severe contraction.
It’s likely prices will fall further as more countries and regions go into lockdown.
Oil has shot up in price, with equities rising too and there’s a bit more interest in government bonds.
Big falls in equities and oil, as well as widespread selling of government bonds, even gold is being ditched.
The Aussie dollar has fallen below the post GFC low.
Despite extreme measures by the Fed yesterday and the return of QE, markets were far from impressed.
Data highlights the huge toll of Coronavirus countermeasures.
We've significantly lowered our global growth forecasts, and in Australia growth slowed confirming a below-trend pace of growth prior to any virus impact.
The RBNZ has slashed rates this morning to a quarter percent.
Markets are in free fall as containment measures impact heavily on business.
The Bank of England and UK government launched a coordinated approach on tackling COVID-19 headwinds, with an emergency rate cut and fresh fiscal stimulus.
Commodity markets generally remain volatile, reflecting the uncertainty presented by the Coronavirus (Covid-19) outbreak.
Markets have bounced back a little even though the battle over oil seems to be getting worse.
Risks remain amid rapid rise in cattle prices.
There has been a massive fall in oil prices.
The rush to bonds continued on Friday, hitting new lows for Treasury yields, even as equities in the US saw a last-minute push and actually finished the week up a little.
Markets have switched back to risk-off mood.
Equities and the US dollar have bounced back even if bond yields remain low.
Fed to further cut rates at its March and April meetings.
The US Fed dropped interest rates by 50 basis points in an emergency cut.
Central bankers and finance ministers are hooking-up on a conference call later today to discuss a coordinated response to the impact of the coronavirus.
Friday marked a bad end to a tumultuous week for the markets, with equities, commodities and bond yields all hit hard.
Thursday proved to be a very volatile day towards the end of a very volatile week.
The markets attempted a bit of a rebound earlier but it hasn’t lasted long.
US economy travelling well but Coronavirus clouds the outlook.
Markets continue to respond to news reports highlighting the (admittedly slow) spread of COVID-19.
The extent of the spread of the coronavirus in South Korea, Europe and numerous other countries, has driven a major fallout in markets overnight.
There was a strong risk-off mood on Friday due to the spread of the COVID-19 infections and the impact it's having on the global economy.
Asian currencies have born the brunt of rising concerns over the spread of COVID-19 beyond the Chinese mainland.
The markets have spun around again,with renewed optimism and not much lingering concern from Apple’s revenue warning yesterday.
Markets have returned to adopting a more cautious approach to the impact of COVID-19, after Apple said it didn’t expect to meet its forward guidance.
Nobody was expecting anything other than a bad GDP read from Japan but it was worse than bad.
Markets are cautiously hoping the worst of the coronavirus is over.
We have revised down our forecasts for global growth in 2020 to 3.0%. While in Australia we now expect a small negative for Q1 2020 growth.
The markets slipped momentarily into risk-off as the number of COVID-19 infections jumped in volume, but concern slipped back a little as it became clear that the way cases were being measured had changed.
The NAB Commercial Property Index increased 5 points to an above average +8 in Q4.
The markets are continuing to discount the impact of the coronavirus.
Commodity prices have generally retreated in early February in response to the Coronavirus outbreak in China.
Trump tweeted as Jerome Powell spoke saying shares were falling the more he spoke.
There seems to be hope of an early recovery to the impacts of the coronavirus.
Ordinarily these numbers would be a cause for optimism in the markets, yet concerns of the impact of the coronavirus are having the opposite impact.
The sun continues to shine on the equity market with the S&P500 making a new record higher, +0.3% to 3,344.
As this week wears on the combination of more positive news is able to lift markets, even while the Coronavirus continues to show no signs of slowing down.
China’s economy faces a host of challenges in the year of the rat.
Since Monday the markets have dived, then climbed back again.
The government has introduced travel restrictions on arrivals from mainland China and advised Australians to avoid travelling to China because of the novel coronavirus.
US equities bounced back today – perhaps because there wasn’t a lot of new news on the coronavirus but also because US ISM numbers exceeding expectations.
The Australian dollar – and emerging markets more broadly – were hit by further concerns over the spread of the coronavirus.
Coronavirus continues to cause concerns, hitting all asset classes overnight, including US and European equities.
The least surprising news today is the decision by the FOMC to keep rates on hold in the US.
US stocks have rebounded after a day when they were hit hard over concerns on the spread of the coronavirus.
The Australian dollar has fallen more than one percent today as concern continues over the spread of the Corona virus.
Growth likely slowed in Q4.
Markets push back the timing of a rate cut from the RBA.
US equity markets have regained composure but will news of a lockdown of the Wuhan district fan further volatility?
Whilst President Trump was self-aggrandising at Davos, US equities stalled.
The US was on holiday Monday so it’s been a quiet session all round.
Dairy dynamics: prices, drought and costs impacting dairy landscape.
The rally in US equities continued at the end of the week, with the optimism spreading to Europe.
China’s ends 2019 in line with expectation.
US equities rose higher still on the back of the latest US retail numbers.
Equities have posted further gains and new record highs.
The US and China will sign the phase one trade deal tonight.
There are reports the US Treasury Department will no-longer consider China a currency manipulator.
In our first podcast of 2020, Ray Attrill discusses the week’s economic news and the broader prospects for the year ahead.
We’re ending the week with risk sentiment at its best level of the year.
Markets have now largely unwound the risk-off moves that have occurred since Friday.
It’s been a particularly bad 24 hours for the AUD (if you aren’t an Australian exporter, that is).
Geopolitical tensions remain centre stage with markets clearly in wait-and-see mode.
With renewed hopes for a Brexit deal and a truce at least on the US China dispute, could 2020 be a year of strong growth?
The AUD held its position after the better-than-expected Australian Labour numbers yesterday.
Not much movement in currencies or equities.
US-China deal reduces downside risks.
China’s industrial sector appears to have stabilised ahead of new trade deal.
The pound took a hammering after Boris Johnson indicated the end of 2020 will be a firm deadline for Brexit, deal or no deal.
There’s been feverish activity in equity markets over the last 24 hours as investors respond to the US-China trade deal and the removal of Brexit uncertainty (for now).
Two of the biggest obstacles to global economic growth have seemingly been removed, or at least sidestepped for a while.
Two significant deadlines today means, whatever happens, we can expect some volatility.
Amid conflicting trade signals, signs growth is stabilising
The Fed has announced no moves on rates in the US, with no expectations for cuts in 2020.
Economic conditions in 2020 are expected to remain unfavourable for commodity markets.
The markets continue to ignore the US impeachment proceedings.
Markets have been calm overnight, in wait and see mode ahead of a series of more important events this week.
Jobs numbers from the US on Friday were well above expectations and we saw a swift response in the markets.
All eyes tonight will be on the US non-farm payrolls data.
Oil has been the big mover overnight ahead of the OPEC summit.
President Trump has upset markets further today suggesting that the trade deal with China might be left till after the US election, a year away.
The markets were spooked overnight by threats of further tariffs from the US President if a trade resolution isn’t reached.
False frenzy – record Single’s Day sales don’t point to Chinese economic recovery.
It’s an important week for Australian markets, with a slew of data today, GDP released on Wednesday and the RBA meeting between them.
President Trump has signed the Hong Kong human rights act.
For once US markets have been driven not by trade talks, but by hard numbers.
RBA Governor Philip Lowe said QE wouldn’t happen in Australia until interest rates got down to 0.25%.
The waiting game - what's next for US-China “Phase One” trade deal?
The hope that something will happen soon between the US and china has sent US equities to new highs.
The offshore wind industry is booming, with 22GW of installed capacity worldwide and the first project planned for Australia.
There was renewed hope a phase one trade deal could be reached between the US and China by Christmas.
The markets anticipate the next development in the US-China trade talks.
Markets adopted a mild risk-off mood overnight.
Janari Tonoike, head of NAB Japan Securities Limited, National Australia Bank’s (NAB) new Tokyo-based, wholly-owned subsidiary, showcases the long-standing relationship between Japan and Australia, and explains how the new entity can help investors and borrowers in both markets and beyond connect better in a challenging global business environment.
Sterling has been the biggest mover as Boris Johnson pulls ahead in the polls.
US equities finished last week on new highs on the hope the phase one trade deal between the US and China is close.
Most of China’s indicators relatively weak year-on-year, however, the 70th anniversary of the founding of the People’s Republic of China at the start of the October has made this harder to gauge.
The Aussie dollar fell sharply yesterday on the back of disappointing jobs numbers, followed by weaker than anticipated activity data from China.
Near term growth prospects still weak, but potential trade deal offers some upside.
The NZ dollar saw the biggest currency move over the last 24 hours.
NAB’s Non-Rural Commodity Price Index is forecast to fall by 7.9% quarter on quarter in Q4 2019.
The US President offered nothing new about where trade talks are at and the markets little moved.
Sterling bounced higher today, shortly after GDP figures showed the UK had narrowly missed a recession.
The fact Trump wasn’t entirely keen on giving up existing tariffs hasn’t stopped investors from pushing equity prices higher.
Now is an optimal time for Asian investors and contractors to explore Australia’s thriving infrastructure sector.
Shares rose higher on further hope that trade talks with China will see a roll back in existing tariffs.
Market sentiment has done a complete U-turn.
Trade truce – US and China reach an agreement, but trade outlook still uncertain.
With nothing concrete to go on, markets continue to factor-in optimism over the US-China trade talks.
Yesterday’s retail numbers showed Australians are cutting back on their shopping habits.
US equities hit new highs again on Friday.
US growth has slowed, but remains solid.
There’s a risk-off mood today.
The US Federal Reserve has cut interest rates as expected.
The NAB Commercial Property Index fell 4 points to +3 in Q3 2019, in line with its long-term average (+3).
Taking flight: China is changing the global tourism market.
Australia’s CPI read today and US GDP numbers tonight.
US stocks are on the rise as optimism for a trade deal intensifies.
A rate cut is anticipated by the Fed and there’s further hope a phase one deal will be signed by the US and China.
The pound weakened as Boris Johnson calls for an election on December 12th.
Mario Draghi is preparing to chair his last ECB meeting, with no expectation he will move rates.
The market reaction has not been favourable to the latest Brexit events.
Two familiar stories dominated the markets overnight.
Trade war finally shows its impact on China, as industrial sector drags Q3 growth lower.
The pound has already weakened on the latest Brexit delay.
The early market response to a new Brexit deal and Aussie employment numbers.
We helped Neuberger Berman set up Australia’s first listed investment trust focused on global fixed income, to turn global bonds into income for Aussie investors.
The pound has risen again as negotiations continue into the night (again) over a Brexit deal.
The pound is riding higher on the back of optimism.
There’s a little apprehension in the markets this morning because the US China trade deal might not be a done deal.
With growth having slowed in Q2 2019, there appears limited prospect of a turnaround in Q3 – given the relative weakness in business surveys, market expectations and the deteriorating global trade environment.
The markets finished last week on a high.
US-China trade talks and Brexit negotiations both look like some sort of deal could be reached.
US opens new fronts in the trade war.
There’s a risk on mood in the markets today.
The downtrend in the AUD/USD took a pause in September, where the currency ended the month 0.3 cents higher than where it began.
Three decades of stable economic growth, generated by widespread political and economic harmony, is in danger of being eroded by increasing political polarisation.
NAB’s Non-Rural Commodity Price Index is forecast to fall significantly in Q4 2019.
Even though trade talks are still going ahead between the US and China this week, what little hope of any sort of outcome, seems to be rapidly diminishing.
Markets are more preoccupied with the outcome of the US-China trade talks this week.
There was something for everyone in Friday night’s US employment report.
In the US the non-manufacturing ISM read came in a lot lower than expected.
It’s a sea of red for global equities and US bond yields.
The markets have reacted firmly to news from the RBA yesterday.
The RBA meets today and the market is 79% priced for a rate cut with 74% of economists surveyed also expecting a rate cut, including NAB.
US equities are on the rise as markets brush off concerns over the lack of progress on US China trade talks
US equities felt the heat on Friday with news that the Trump administration was looking at new ways of limiting investment in China.
The US dollar index (DXY) reached over 99.3, close to a two-year high.
Pork shortfall to maintain higher inflation in the near term.
The markets reacted positively to indications from President Trump that a trade deal with China could be close.
Impeachment proceedings against the US President has hit equities, bond yields and oil prices hard.
Economy tracking OK but trade & other headwinds will take their toll.
India’s economy needs a stimulatory kick start, with no guarantees of recovery.
RBA Governor Philip Lowe is talking in Armidale later today.
Treasury representatives from Associated British Ports, Peel Ports, NSW Ports and the Port of Tauranga recently met to explore and share their insights on the opportunities and challenges facing port owners and operators.
Hopes of a quick resolution to the US China trade dispute seem as unlikely as ever.
There’s rising expectation the RBA will cut interest rates at their next meeting.
The Federal Reserve cut rates but didn’t give a clear indication of further cuts or promise the return of QE.
Companies sometimes seek changes to covenants during the life of a 10 to 15-year note. In this article, we examine the issues that can prompt such a request.
Oil prices fell sharply on news Saudi oil production will be back in full by the end of the month.
China’s industrial sector struggling ahead of the latest round of trade measures.
Brent Crude rose 20 percent at the market open on Monday morning, the biggest single move since the invasion of Kuwait in 1990.
Crude oil markets may tighten significantly following weaponised drone attacks on the world's largest oil refinery at Abqaiq on Saturday.
Attacks on the world’s largest oil refinery has hit global supplies hard.
Global economic growth slowed further in Q2 2019. Major advanced economy (AE) GDP growth declined to its slowest pace since mid-2016.
The ECB is to reintroduce quantitative easing.
A stimulus boost from the ECB is widely anticipated.
In US dollar terms, NAB’s Non-Rural Commodity Price Index is forecast to increase by 1.8% quarter on quarter in Q3 2019.
Globally yields are on the rise again.
Bond yields have paved down across the world, driven by a sell-off in German bunds.
US payrolls numbers disappointed a little on Friday and China’s trade numbers over the weekend demonstrated what impact the trade war is having.
There’s been big moves on equities and bonds today as talks between the US and China appear to be back on.
The US dollar is weaker today on the back of positive developments in other parts of the world.
Very soon it’s likely that the UK parliament will take the first step to delaying Brexit, allowing for yet more negotiating time with the EU.
Boris Johnson stood outside No. 10 Downing Street earlier, saying he didn’t want an election before the Brexit deadline.
In the US new tariffs on Chinese imports kicked in over the weekend,.
In the US, the dollar, equities and bond yields have all risen on the news that China would rather talk than retaliate.
UK politics has turned even more toxic with Prime Minister Boris Johnson suspending parliament from September 12, for five weeks.
Markets have taken a hit as much of yesterday’s optimism subsides.
The markets have done a complete u-turn overnight on the back of positive news on the US China trade talks and some wins from the G7 summit, including proposals to reform WTO rules and a potential US Iran meeting.
China’s official response to President Trump’s latest round of import tariffs sent markets into a spin on Friday.
More Fed cuts likely as trade headwinds strengthen.
Markit PMIs show US manufacturing has contracted, whilst in Europe it remains in a slump but hasn’t fallen as far as anticipated.
The FOMC minutes released highlight the divisions in the Fed at their last meeting.
The markets retreated from yesterday’s optimism.
A wave of positivity seems to have hit the markets.
The surprise news on Friday were reports that the German government might relax some of its spending rules to splash out and prevent a recession.
The latest escalation in the US-China trade war has reverberated through financial markets. The policy response will be important - we now expect two further 25bp cuts in the fed funds rate this year. China is also likely to use policy measures to offset any tariff impact, including allowing further depreciation of its currency.
An ECB Governing Council member suggests markets hadn’t priced in the extent of the stimulus measures coming next month.
The latest escalation in the US-China trade war – with the US imposing a 10% tariff on most remaining China imports – has reverberated through financial markets.
It’s far from a quiet day in markets.
China’s economy is continuing to slow, even before the latest round of US tariffs (and China’s retaliation), meaning there’s further downside risk.
US dollar NAB’s Non-Rural Commodity Price Index is forecasted to increase by 2.1% yoy in Q3 2019, however underlying trends remain highly mixed. Higher export prices for LNG and iron ore (despite more recent spot price falls) are the key contributors, while both thermal and metallurgical coal are weaker, as are most base metals.
There’s been a sharp turnaround in market sentiment as the US announced delays to the extra tariffs on Chinese imports for certain consumer-sensitive products.
There’s a continued risk-off mood in the markets today, not helped by protestors forcing the closure of Hong Kong Airport and a surprise defeat of Argentina’s President Macri in primary elections at the weekend.
The US President hinted that a resumption of trade talks with China wasn’t a done deal, adding uncertainty in an already shaky market.
Are the markets more concerned about the relative strength of the Chinese currency than they are about tariffs?
Overall market sentiment lifted 9 points to +7 in Q2. It rose in all states (bar SA/NT), and was highest in VIC & NSW.
It’s been a hectic 24 hours, with shares falling them climbing back, with bond yields doing the same.
US stocks have bounced back and the US dollar has picked up against the Yen.
Markets continued in risk-off mood as China announced its response to President Trump’s threat of extended import tariffs.
How successful has China’s deleveraging program been in managing the country’s debt?
There was a swift market reaction to President Trump’s announcement of further tariffs on imports from China
A tweet from President Trump promising a 10% tariff on the remainder of imports from China has sent the markets into a tailspin.
There was some short-term market reaction during Powell's press conference.
Get ready for a busy 24 hours.
The pound took another hit today, now at its lowest level since March 2017.
US economic growth slowed in Q2 2019 – will this trend continue? One implication is that the Fed will cut rates.
The US finished on a high last week.
The latest IFO readings have shown a sharp downturn.
Eurozone manufacturing PMIs are well down, hitting a seven-year low in Germany.
US shares were doing well ahead of the news that trade talks would resume between the US and China next week.
The race is on to try and get through stuff before the summer recess in the US and Europe.
There was a reversal of fortunes on Friday as the NY Fed clarified comments from their President John Williams the day before.
Could the Fed be careering to a half percent rate cut at the end of the month?
The Fed’s Beige Book is out this morning.
US retail sales were strong but t’s not all good news.
China's industrial production numbers were far better than anticipated.
Growth slowed in Q2 but policy support should see it stabilise.
China reported disappointing import numbers at the close on Friday.
Indicators in major advanced economies point to a renewed easing in growth for the rest of 2019, driven largely by the US economy. Similarly in Australia, we expect growth to continue at a below trend pace over the next few years.
Fed Chair Jerome Powell didn’t alter his stance despite signs of inflation picking up in the US.
Global growth remains under pressure even with US-China trade dispute pause.
Jerome Powell has sent the markets back to where they were before the non-farm payrolls data last week.
NAB’s Non-Rural Commodity Price Index has been on the up in recent quarters, in large part due to iron ore prices.
Panelists at NAB's annual DCM conference discussed the ideal confluence of demand and supply in the Asia Pacific (APAC) region, which is home to some of the worlds fastest growing economies.
Ray Attrill explains how the latest small business survey data in the US shows signs that tariffs on Chinese imports might be starting to make their mark.
There were no big movements on US equities or bonds overnight, as markets wait to see what Jerome Powell has to say in his Congressional testimonies mid-week.
The US payrolls data was stronger than expected on Friday.
Trading has been thin as US markets closed for the 4th July holiday.
US equities took an early mark on record highs, whilst bond yields fell further.
Global bond yields have fallen after BoE Governor Mark Carney warned of a shipwreck to the global economy if trade tensions intensify.
Horticulture exports grow to rival Australian lamb and dairy.
The RBA meets in Darwin today and is expected to cut interest rates.
The markets breathed a collective sigh of relief that the Trump-Xi meeting at the weekend culminated in some sort of truce.
Markets seem to indicate a little optimism on the outcome of the Trump-Xi meeting at the G20 this weekend.
Will interest rates in the UK go up or down?
Risk adversity drives yields to record lows in Europe.
Even an executive order declaring more sanctions against Iran did little to influence markets.
The Fed is close to cutting rates.
NAB’s Non-Rural Commodity Price Index is expected to increase by 0.9% quarter on quarter in Q2 2019, a little stronger than anticipated in May.
European markets reacted to better than expected PMI numbers on Friday
Investing in infrastructure is a long-term trend that will continue to endure global economic challenges, generating healthy returns and diversification opportunities as investors enhance focus on environmental, social and governance (ESG) factors.
The market continues to respond to the Dovish Fed statement yesterday with a rally in US equities, falls in Treasury yields and a fall in the US dollar.
The rising global stature of Asian investors and their search for fresh avenues to deploy their expanding wealth is aiding the growth of new markets.
The Fed has kept rates on hold but have kept the door wide open for future rate cuts.
There’s been a lot of movement in equities and bonds.
What picture will Mario Draghi paint of the European economy at the ECB forum today and what does he intend to do about it?
Policy makers ready to stimulate as signs of weakness grow.
There are rate meetings for the FOMC, Bank of Japan and Bank of England this week, as well as the ECB Forum opening in Portugal tonight.
The Bigger Picture – A Global and Australian Economic Perspective – May 2019.
In this month’s currency podcast, our Head of FX Strategy discusses some changes to NAB’s FX AUD forecasts.
The Aussie dollar was the worst performing of the major currencies overnight following yesterday’s unemployment numbers.
Trade policy turbulence continues to unsettle the global economy.
News of President Trump threatening sanctions on Germany had an immediate impact on the Euro.
China is doing what it can to boost infrastructure investment.
Can China weaponise rare earths to open a new front in the trade war?
There’s a ‘risk on’ mood in the markets this morning after Friday’s u-turn by the US President over Mexican tariffs.
The Euro rose today after the ECB spoke little of new measures to combat the economic downturn.
Markets are hopeful that a deal will be reached between the US and Mexico, and tariffs will be avoided.
There’s been a sharp rise in US equities after comments from the Fed’s Jerome Powell, signalling rate cuts are likely.
The RBA is expected to cut interest rates today, but more interesting will be what Philip Lowe says this evening.
The market continues to adjust to the expectation that the US-China trade spat won’t disappear in a hurry.
Treasury yields have continued their downward direction indicating growing expectations for a Fed rate cut – possibly three.
How far do US stocks need to fall before the President takes note and tries to resolve the US-China dispute?
We invited Treasury representatives from four non-bank financial institutions and one UK-based asset manager – Liberty Financial, La Trobe Financial and Resimac Group in Australia and Kensington Group and TwentyFour Asset Management in the UK - to an International Round Table to discuss the opportunities and challenges in their respective mortgage and securitisation sectors.
Consumer confidence in the US hit a six month high, yet there’s a continued flight to bonds, pushing Treasury yields to the lowest level since September 2017.
US-China trade dispute a headwind to growth.
There are repercussions being felt across the continent following the election.
Markets calmed a great deal on Friday.
There have been significant moves overnight, with the US dollar losing ground against the Yen and Swiss Franc.
In the FOMC minutes the Fed reiterated its pledge to wait and see on interest rates.
US equities have been boosted by a brief reprieve on Huawei trading restrictions.
Bond yields have risen slightly ahead of Jerome Powell’s talk today - will he give a strong hint a rate cut is coming? And will Philip Lowe from the RBA be doing the same?
Looking for work: the health of China’s labour market is still hard to ascertain.
Following the Coalition’s surprise victory on Saturday night, we’re already seeing a rise in the Aussie dollar.
The Bigger Picture – A Global and Australian Economic Perspective – May 2019.
Overnight we saw rising US share indices and a strengthening dollar.
Trade worries overshadow tentative signs of activity stabilising.
Weaker economic trends even before trade tensions heat up again.
US and European equities are up again on reports President Trump is delaying auto-tariffs due to kick in this weekend.
Reflecting the sustained strength in iron ore prices, NAB’s Non-Rural Commodity Price Index is forecast to increase by 0.4% qoq.
In Europe they’ve nicknamed last night as 'Turnaround Tuesday as stocks regained much of their losses.
Stocks, currencies, bonds and commodities have all felt the impact as China responds to US tariffs.
The US President has threatened further tariffs on China over the weekend, on top of those imposed on Friday.
The imposition of tariffs by the US on Chinese imports is just hours away.
US equities have partially reversed their declines.
Australia offers Asian investors portfolio diversification in a stable economic and political environment.
US equities have been knocked again as increased tariffs from the US on Chinese imports are looking more likely than not.
It’s not beyond the realm of possibility that the RBA could cut interest rates today.
The US President has been on Twitter in the last few hours threatening to lift tariffs on China by the end of the week
The market continues to react to Fed chair Jerome Powell’s ‘transitory’ remark on low inflation yesterday.
Overall market sentiment (measured by NAB’s Commercial Property Index) fell 11 points to -2 in Q1 2019 - its first negative read in over 4 years.
Markets moved sharply during Jerome Powell’s press conference.
It’s less than a day before the FOMC meets and Jerome Powell talks to the press.
Q1 GDP – headline growth overstates strength, but still a good result.
It’s been a relatively quiet 24 hours as markets wait for word from the Fed later in the week.
Friday’s headline US GDP numbers was surprisingly strong.
It’s been a dovish couple of days for central banks.
Earnings results have pushed US equities to record highs.
The Trump administration announces an end to waivers for nations buying Iranian oil.
China delivered some more positive results in the last 24 hours.
Credit surge keeps growth stable in Q1, but will the taps stay on?
The OECD suggests China’s stimulus measures may only offer short term benefits but the markets are happy to ignore the long term impacts.
The week’s got off to a quiet start.
Crashing cars: how deleveraging has hit China’s automotive sector
Last week finished on a positive note, sparked by a strong bounce back in credit growth in China, together with very strong export numbers.
The US dollar was helped overnight with surprisingly low jobless claims numbers in the US.
What did the RBA’s Guy Debelle say yesterday to spur the Aussie dollar on so much?
In USD terms, NAB's Non-Rural Commodity Price Index is forecast to fall by 1.9% qoq in Q2 2019.
There’s certainly a more cautious mood today.
It’s been a quiet 24 hours that has seen stocks lose some of their gains of last week.
US non-farm payrolls data emed to indicate a Goldilocks economy – more jobs and with wages contained.
US payrolls data is out this evening (Australia time) and, unless something else is brewing, markets tend to tread water in anticipation.
There are three bits of news driving optimism in the markets.
The markets are a lot calmer after yesterday’s rally in shares and sell-off of bonds. And the Kiwi and Aussie dollars have taken the biggest hit out of the major currencies.
There was continued optimism in the markets overnight with more strong data reads from China and the US.
China’s PMI numbers over the weekend were better than expected.
Still expecting a growth slowdown but no recession.
The UK Prime Minister will table her Withdrawal Agreement again tonight.
NAB recently invited Treasury representatives from Heathrow, Changi, Sydney, Brisbane and Auckland airports to a virtual Global Round Table to discuss the opportunities and challenges of rapid growth in passenger traffic.
A risk-off mood saw moves to US Treasuries with big falls in yields and shares.
The US stock market has rebounded helping the Aussie dollar.
The pound has suffered the most of the major currencies.
After 27 years of steady economic growth – a record unmatched by any other developed economy – some are asking whether Australia is overdue for a recession.
The markets seem a little spooked with big falls in equities in the US on Friday.
So what now for Brexit? Plus the marked reaction to yesterday’s Fed forecasts.
The US Fed has revised its growth forecasts for this year and next, and removed all dot points for rate moves this year.
Add it up: the uncertainty around China’s economic data
Media reports suggest China is playing hard ball in negotiations with the US.
The markets are on-hold ahead of the FOMC meeting later in the week.
It’s a slow start to the trading week.
The bigger picture – A global and Australian economic perspective.
Why are the Aussie and New Zealand dollars amongst the worst performers overnight?
Growth slowdown continues; risks still to the downside
And signs that the European economy might be levelling off rather than falling.
In USD terms, NAB’s Non-Rural Commodity Price Index is forecast to increase by 3.1% qoq in Q1 2019.
Boeing's share price has driven the Dow down whilst lower than expected inflation will have had a bit to do with bond prices today.
US stocks rose sharply following the release of US retail numbers which showed a bounce back in January.
Friday saw quite a shocking miss on US non-farm payrolls.
Markets have reacted swiftly to the latest ECB meeting.
Australia’s GDP numbers yesterday surprised many.
It’s been a strong 24 hours for data releases.
Markets in the US and Asia buoyed by news that a deal between the US and China was close.
The US saw some poor economic data on Friday yet bond yields rose as did equities.
Trump’s walkout of the meeting with Kim Jong Un dominated had little interest to the markets.
Three pieces of news drove sentiment overnight.
The US economy appears to have slowed in the final quarter of 2018, and is expected to continue throughout much of 2019.
A boost for the pound and mixed data from the US.
There’s been significant progress on the two stories that have hindered markets this year.
The markets were buoyed at the end of last week by hopes that some sort of trade deal with China was closer.
Reports China is blocking the import of Australian coal into its Dalian port hit the Aussie dollar hard with no sign of recovery just yet.
Have the Fed clarified its position after an apparent U-turn at their last meeting?
Year of the Pig brings an uncertain outlook
The US dollar is a little weaker this morning as the deadline for US tariffs on Chinese goods looms.
Markets are speculating whether the US will impose tariffs on car imports from Europe.
Could Trump’s declaration of an emergency to fund his wall have consequences for the markets?
US private placements to stay a step ahead of the funding options pack for Australian corporate borrowers
The bigger picture – A global and Australian economic perspective.
Markets have been choppy on the back of surprisingly poor retail numbers from the US.
Global slowdown continues into early 2019
The NZ dollar jumped 1.7 percent yesterday after the RBNZ indicated they weren’t expected to change rates till 2021.
It’s looking likely the 1 March deadline for higher Chinese tariffs will be pushed back on the hope of progress on trade talks next month.
The US dollar is now sitting at its strongest level of 2019 in DXY terms.
Talks at averting another US government shutdown ended in deadlock at the weekend.
Overall sentiment among property professionals increased marginally in the final quarter of 2018.
It’s a sea of red for shares this morning. How much of this is down to Larry Kudlow’s comment that there’s a “pretty sizeable distance to go” before trade issues are resolved with China?
Words from the RBA’s Governor Lowe send the Aussie dollar spiralling downward yesterday.
Trading volumes have been lower ahead of President Trump’s State of Union address.
It’s a significant day for Australian news, in a period where little else is driving markets in the rest of the world.
On the face of it, the US looks like it's enjoying a Goldilocks economy right now: there’s growth, employment is strong and inflation is low.
The dovish tone set by the Fed yesterday has seen renewed vigour in the US equity markets helped by further strong earnings.
The Fed's stance has had a strong impact on markets in the immediate aftermath.
The US equity markets are mixed ahead of the Apple earnings results.
Equities took a hit as Caterpillar, a bellwether stock, missed its quarterly forecast, showing that the tariff war isn’t just hitting the Chinese economy.
European PMIs came out weaker than expected. That, together with a downbeat Mario Draghi, saw the Euro weaken.
Negativity on the state of the global economy has managed to overshadow positive earning results from US companies.
China’s economy continues to soften, but our outlook is unchanged.
A blue day on the global markets.
Get up to speed on the key themes for the Chinese economy in 2019 with our latest podcast.
Global Dairy Trade auction results have seen some upside since December after a fairly weak run over much of 2018.
On a quiet day on the markets (due to Martin Luther King Day in the US) the main focus has been, again on Brexit.
There was renewed hope at the tail end of last week the answer to the US China trade dispute isn’t far away.
There’s still no sign of an end to the US China trade dispute as the end of the cease-fire period draws closer.
Theresa May has won the confidence vote in her government, so she can battle on with Brexit.
Augmented Yield Curves in the US and Australia – what do they tell us about the growth outlook for Australia and the US?
Theresa May’s government faced a massive defeat in Parliament with a 230 vote loss on their Brexit withdrawal agreement.
The US government shutdown is now in its 25th day but the direction of the global economy is a bigger concern.
The shutdown impacting parts of the US government remains, the passing of Theresa May’s meaningful vote on Brexit seems unlikely and negative data from Europe has some wondering whether the region is already in recession.
Fed Chair Jay Powell’s comments at the Economic Club in Washington supports risk sentiment.
FOMC Minutes just released show Fed more dovish than post Dec-18-19 meeting statement/presser suggested
US-China trade talks extended into a 3rd day.
Positive sentiment in the US on Friday and in the APAC session yesterday has carried through into overnight markets notwithstanding a downside surprise in the US non-manufacturing ISM report.
It was far from a quiet Christmas period, with volatility driven by data, trade concerns, a government shutdown and a very different attitude coming from the US Fed.
2018 has been a year of surprises. In the final podcast for the year, the team discuss the year that was and what to expect in 2019.
US stocks have fallen markedly since the Fed meeting yesterday, with the dollar also taking a hit and the yield curve flattening a little.
Economic growth is likely to equal its post-GFC high in 2018.
Does the message from the US Fed set the right tone given sensitivities in the markets right now?
Turning 40: Charting the rise of China since reform and opening up
Oil fell even further overnight.
The Bigger Picture – A Global and Australian Economic Perspective – December 2018
Weaker indicators point to slowing economic growth in Q4
Equities, oil and bond yields are all down.
US shares were pummelled on Friday as fears of a global slowdown widen.
Education has grown to a scale export industry, and is now Australia’s third largest export earner.
Mario Draghi’s fear of growing downside risks didn’t do too much damage to the Euro.
Slowing growth paired with greater uncertainty going forward.
The Chinese economy is liberalising and opening up to the rest of the world, paving the way for foreign investors to tap into opportunities in the increasingly wealthy nation, the 2018 ASFA Conference heard.
US equities have had a shot in the arm following a Wall Street Journal report that China might open up access to their domestic markets for foreign companies.
A positive reaction to reports China might drop tariffs on US car imports reversed by threats from President Trump about a possible government shutdown if he doesn’t get the funding to build the wall.
The pound has taken a hit on the increased uncertainty on where Brexit is heading.
Private markets can offer consistent and steady support for issuers, the First Look Conference in Sydney was told.
The markets reacted sharply to weaker than expected payrolls data from the United States.
Australia’s superannuation funds are turning to venture capital for the outsized returns the sector can generate and to diversify their portfolios, the 2018 ASFA Conference heard.
There were big falls in equities in the US and across Europe overnight, with rises in bonds, the Yen, Gold and the Swiss Franc reinforcing the risk-off mood.
Chinese authorities issued a Q&A which seems to have buoyed markets a little.
Risk sentiment has turned sour all of a sudden, with flattening yield curves preying heavily on the concerns of investors.
Equities were boosted overnight by the positive (temporary) deal between the US and China.
As 2018 draws to a close, we’d like to share some of the achievements of our Corporate and Institutional clients over the past year.
An agreement was reached between Presidents Trump and Xi at the G20 meeting over the weekend.
The markets have been treading water ahead of the meeting between Presidents Trump and Xi at the G20 this weekend, impacted a little by the news that Peter Navarro might also be attending the dinner.
President Trump is threatening more tariffs – this time on car imports.
President Trump has threatened China again, suggesting the prospect of tariffs at the year end is real.
There was a spark of confidence in the markets overnight as equities rose in the US, along with a bounce back in oil and a rise in Treasury yields.
Build-to-rent could provide new avenues for investors as well as improve housing affordability, a NAB conference has been told.
Thanksgiving week finished with a rapidly falling oil price and questions over the strength of growth in the US economy.
Initial indicators for Q4 suggest the economy continues to perform strongly towards the end of 2018.
Harvest is now underway for 2018-19 winter crop, a season which will likely go down as one of the most mixed in years.
Theresa May and European negotiators have agreed an outline of what the relationship will be after the UK finally leaves the EU which helped the pound today.
Hands in pockets: Chinese consumers are confident but that doesn’t show up in retail sales data
Oil and equities have bounced back up.
Oil prices and US equities are back close to where they were at the start of the year.
US stocks take a big hit. The Aussie and New Zealand dollars seem to have come off the worst out of the major currencies with a rise in uncertainty, whereas Sterling has risen.
The US dollar and Treasury yields fell on Friday as Fed Vice Chair Richard Clarida said they were close to being neutral on interest rates.
Trade impacts are yet to emerge, but mixed signals persist in China.
How low can the pound go if the UK shifts towards a no-deal Brexit?
Global growth is above average but slowing.
Uncertainty on whether the UK Cabinet would pass May’s Brexit deal played heavily on the pound overnight but it rebounded when the deal was approved.
A first Brexit milestone could mean a volatile 24 hours or so for Sterling.
With just 137 days until Britain leaves the EU, how low could the pound could sink given the rising uncertainty?
Is the bear market in oil about to turn?
The FOMC has kept interest rates on hold. Meanwhile Italy and the EU seem to be at loggerheads on budget numbers and the UK’s Brexit secretary appears a little uninformed, as one cabinet minister breaks ranks on Theresa May’s plan.
Will the results of the US mid-terms impact the focus of the Fed?
As Americans head out to the polls the markets are left guessing whether it’ll be a good or bad result for President Trump.
We can expect a relatively quiet 24 hours trading as the world waits for the results of the US mid-term elections.
Sanctions are stepped up against Iran today. Plus, the latest on Brexit.
The US dollar staged a swift reversal overnight, with the spot index falling significantly. We’ve also seen US stocks on the rise, along with significant leaps forward for the Aussie dollar and the pound, whilst oil falls sharply.
What will the US mid-term election results mean for the AUD?
US equities bounced higher overnight, helped by Facebook’s earnings report.
The US dollar hit new highs on the back of a falling Euro and Pound.
Equities rebounded sharply at the start of the session in the US, but lost ground, but are still up on the day.
US economy continued to grow strongly in Q3.
It’s a big week for global markets as well as the AUD.
US equities reversed their declines with a sharp rise overnight, ahead of today’s GDP numbers.
The US stock market took another hammering overnight, with a move to safe-haven treasuries.
It has been another bad day at the office for equity markets, beginning in the Asian session and spreading across Europe and the US.
The Chinese stock market performed well on the back of yesterday’s proposals from the government and the PBoC. And there’s increasing questions over whether the UK PM should stand-down.
This week, we share our thoughts on inflation, with Q3 CPI due to be released in a little over a week on Wednesday 31 October.
Overall sentiment in commercial property markets (measured by the NAB Commercial Property Index) fell 9 points to a 2-year low +8 in Q3, but is still well above long-term average levels (+3).
AUD (and NZD) this week look set to remain in the hands of broader USD and Emerging Market (EM) moves.
There’s caution in the air, but could it just be for a day?
Despite increasing tensions over the missing Saudi journalist, oil fell sharply.
US shares are racing ahead again on earnings results and further evidence of a strong US economy.
This week, we're reproducing a thematic piece on US stock market valuations.
Still hope a Brexit deal can be found, fears of a US response to the death of a journalist in Saudi Arabia seem to have been put on hold, keeping oil prices in check. And a look ahead to today’s NZ inflation figures.
The pound has fallen sharply as the currency markets opened on the news that a Brexit deal this week is looking very unlikely.
The NAB Rural Commodities Index rose 6.5% in September, recording the biggest monthly gain since December 2010.
Equity markets took another hammering overnight.
Overnight saw a big sell-off of US and European stocks.
Whilst the US economy seems to go from strength to strength, there is speculation that China will ramp up stimulus measures to keep their economy strong.
Equity markets took a hammering overnight. China felt it worst after their Golden Week holiday.
This week, we thought we would look in brief at two important issues and how they are impacting the Australian economy and financial markets.
Strong US payrolls data on Friday saw bond yields push higher.
The rising US dollar is playing havoc on emerging market currencies and the Aussie has got tied up in the bad news.
Could oil reach $100 a barrel? And why have US treasury yields leapt forward overnight?
Italy’s travails continue and heightening oil prices are causing problems for Indonesia.
An eleventh-hour deal has has buoyed markets and contributed to increased risk sentiment.
The size of the Italian government’s budget deficit is causing concern in Europe.
The Italian budget wasn’t as easy to resolve as the markets had hoped.
The FOMC lifted interest rates in the US this morning with the expectation of another hike in December.
A commitment to relationships in Japan and Australia, respect for supply chain profitability and a focus on quality has seen Edwards Livestock double exports in less than a decade.
The markets are quiet ahead of tomorrow morning’s FOMC meeting. Meanwhile, there seems to be a further waiting game on Brexit and NAFTA.
China’s consumers aren’t ready to drive the economy’s growth.
Oil reached a multiyear high.
The pound took a hit on Friday. Ray Attrill discusses whether we can expect it to sink further this week, and what that could mean for the Aussie dollar, which also fell slightly at the end of last week.
The US dollar is down this morning even though equities are at record highs.
Whilst China has promised to retaliate against the US tariffs, it hasn’t gone as far as it could.
The Aussie dollar was on the rise overnight, even as all eyes and ears were waiting on an announcement on the next round of tariffs from the White House.
In this Weekly, we set out our latest thoughts on the Australian dollar.
The US President is keeping everyone guessing on further tariffs on Chinese imports.
The bigger picture - a global and Australian economic perspective.
Quite a few moving points to what has been a reasonably volatile night in markets.
The Aussie and Kiwi dollars gained some ground helped by hopes of renewed trade talks between China and the US.
US 10 year Treasuries are closing in on 3 percent again, as expectations firm on two further rate hikes this year.
No further news on tariffs overnight calmed down emerging markets overnight and gave the Aussie dollar a short reprieve.
President Trump has threatened to sharply escalate the US trade war with China.
There’s a risk-off mood in the markets this morning.
The Aussie dollar was higher despite continued woes in emerging markets, whilst the pound gained strength on positive hearsay on Brexit negotiations.
The Aussie and the Kiwi dollars have hit multi-year lows as the situation worsens in emerging markets.
Quieter markets didn’t help the pound which fell on further UK-EU disagreement on Brexit and more speculation on a leadership challenge.
Are hopes of a US-China trade deal waning?
Equities and currencies in emerging markets took a tumble overnight, hurting the Aussie and Kiwi dollars in the process.
The pound soared higher today whilst the Aussie dollar suffered.
Property issuance in the US Private Placement market is back in favour with investors across North America.
US consumer confidence is the highest its been in 18 years, even as the US trade deficit worsens, largely through weaker agriculture exports.
There’s been a swift market response to a possible understanding between the US and Mexico to replace NAFTA, helping the Canadian Dollar as well as the Peso.
US equities hit record highs on Friday.
Ray discusses the possible scenarios that could play out in Australian politics today and what the market impact will be – it’s already hit the Aussie dollar quite markedly.
News of five of the US President’s associates being guilty of felonies continues to have little reaction on the markets.
What influence has President Trump’s discontent with the work of Jerome ‘Jay’ Powell had on the markets?
China’s trade relationship with the European Union.
Treasury yields drifted lower in the US today.
Speculation the US and China will strike a deal on trade around November has given markets some reason for optimism.
Global growth appears to have remained above average through the first half of 2018, but with our leading indicator pointing to a moderation in coming quarters, we think that this will represent the peak for this cycle.
Markets turned on their head a little today, as the possibility emerges of trade talks between the US and China before the end of the month.
The US dollar and equities are on the rise and EM currencies teetering on the edge of a bearish market.
Markets seem less concerned about the troubles in Turkey.
The Turkish Lira continues to fall.
The weekly highlights the outlook for the NZD and AUD.
The crisis in Turkey’s currency is having ramifications far afield.
The Russian Rouble and the Turkish Lira hit hard over US sanctions.
The markets are a little subdued this morning.
The Renminbi rose today and, demonstrating its dependency, the Australian dollar followed suit.
The US move to push ahead with sanctions against Iran will heighten tensions with Europe.
Markets revert to trade focus as China announces specific tariff rises on $60bn goods should the US $200bn threat come into force.
Dirty trade talk rattles the markets.
The markets somehow expected more from the Bank of Japan but there was swifter market reaction to news that the US and China might restart trade talks.
As the current phase of privatisations approaches its conclusion in Australia, local infrastructure investors are looking to international markets for investment opportunities. At the same time, global capital that was drawn to the Australian market by the deep pipeline continues to actively pursue Australian deals. This has created significant competition in Australia and seen infrastructure investors increasingly focus on a broader class of assets.
Today, a session that has been high on movement, even though it’s been low on data. And the Bank of Japan’s attempts to control bond yields has impacted bond prices across the globe.
The US has boasted about the economic turnaround evidenced by Friday’s GDP figures.
Equity markets got a boost from the news Trump and Juncker have reached an agreement to halt further tariffs but tech stocks took a dent from the sharp fall of Facebook’s earning results.
Despite trade talks, shares continue to rise, but for how long? And what’s happening to Australian inflation – a temporary falter or the start of a softening trend?
China’s burst of confidence, irrespective of trade talks, is helping the Aussie dollar, but will it continue if the uncertainty continues?
The Bank of Japan’s changing approach to yield control and China’s policy to protect the economy had the most impact on markets today.
Today’s weekly includes the results of our recent survey of our readers' views and outlooks for the Australian economy and key financial market indicators.
What will be the impact of a prolonged trade war? Is it bad news for the Aussie dollar?
The Yuan has served to undermine all of the gains in the AUD generated by yesterday’s good employment report.
Could slowing inflation cause the Bank of England to rethink the prospect of an August rate rise?
The move higher in front end yields boosted the USD, although the greenback was already on the ascendency early in the overnight sessions.
Trump in Helsinki and the EU in Beijing didn’t really move markets but the dissent in the UK has weakened the pound.
China’s M2 money supply grew less than expected on Friday.
The global economy remains in reasonable shape right now despite some pressures on Emerging Market economies.
Whilst Trump is overseas, the stock market has rebounded from yesterday’s falls, whilst Brent Crude continues to fall.
The US has imposed extra tariffs on Chinese imports. Gavin Friend discusses the market reaction.
The next battle for Theresa May is in Brussels – will the EU accept her proposal, at least as a starting point? Plus, US ‘poised’ to release $200bn China tariff list, puncturing risk-positive offshore sentiment.
The markets outside of the British Isles have seen some positive sentiment, including Australia.
Theresa May has presented her Brexit strategy with the full support of her cabinet, apparently.
The Fed, ECB and the BoE seem a little more hawkish, indicating that, whatever is going on in the background, their economies seem to be faring well.
NAB’s USD non-rural commodity price index declined by over 3% q/q in Q2 2018. This only partially reversed the large gain made in the previous quarter and, as a result, it is still 7.5% higher than a year ago. The fall in Q2 mainly reflected a decline in iron ore and metallurgical coal prices, although LNG export prices – linked to the price of oil – rose.
On an otherwise quiet day there was some volatility in the Yuan on reports that China is happy with a weakening currency.
Overnight we saw US stocks fall and bond yields up, but the real action has been in China with a weakening of the Renminbi reportedly kept under control by lots of buying from state banks.
The Aussie and Kiwi dollar were two of the worst performing currencies overnight.
Participants at the 2018 Asian Debt Capital Market conference discuss some of the key megatrends bringing depth and dynamism to Debt Capital Markets in the Asia-Pacific region.
Not the quietest start to the week.
The New Zealand dollar has taken a hit. Meanwhile markets remain confused and concerned about the continuing trade tensions.
The new approach to China isn’t any softer.
Oil prices pushed higher.
The markets are a little uncertain about how to price the rising tariff confusion, with equities hit hard today but other risk-off signs – such as gold and bonds – hardly moving.
President Trump’s protectionist measures and OPEC’s increased oil production could be the two major market influences this morning.
Political risks and uncertainty may be on the rise. But a recent tour of Asia for the NAB Asian Debt Capital Markets Conference reminded NAB Global Head of Research Peter Jolly of the many causes for optimism about Australia’s economy.
The biggest moves have been in US equities, hit by a court ruling on state taxes, and the pound, after a moderately hawkish Bank of England meeting.
The markets have moved very little today as investors contemplate the next steps in the tariff battle between the US and China. Even the EU response, with tariffs to follow on Harleys, Levis and Bourbon, did little to stir a response.
Equities, currencies, bonds and commodities all reacted to more rhetoric from President Trump about Chinese tariffs.
At NAB’s 2018 Asian Debt Capital Markets Conference, experts, issuers and investors zeroed in on the forces that will build connections and foster future opportunities.
There’s been very little movement in anything overnight, except the price of oil.
Trade talks between the US and China took a turn for the worse at the end of last week, with the Trump administration issuing a list of $50 billion worth of products that would be hit with a 25 percent tariff.
Real GDP figures showed a pick-up in growth to 1.0% in Q1 (from 0.5% in Q4) lifting growth to 3.1% over the year.
The ECB announced today, as anticipated, that their QE program will finish at the end of the year. But markets weren’t quite expecting the anticipated delay in raising rates – which could be late in 2019.
The US federal Reserve lifted interest rates this morning, as expected.
There was little market reaction to the big deal between Presidents Kim and Trump.
In today’s weekly, and as President Trump and Kim Jong Un meet in Singapore, we look at the outlook for the US$.
Can we expect any market reaction to the Singapore Summit? Also, the response to the spat between Trump and Trudeau, the disappointing manufacturing data from the UK and the start of a busy week for central banks and Brexit talks.
Leaders going into G7 seem to be holding their positions firm on trade tariffs and the Iran Nuclear Deal. So much so, it’s unlikely the markets will pay too much attention.
The market has turned its focus on what the ECB will say about the timetable for unwinding its QE program when they meet next week.
Further speculation that NAFTA talks might fall apart, strong data from the US and UK, and a look ahead to today’s GDP figures for Australia.
The markets have switched back to risk-on, helping the Aussie dollar rise faster than any of the majors this morning.
There is expected to be continuing downward pressure on the AUD from interest rate differentials given higher US yields.
After the excitement of Parmageddon last week, followed by the sudden enforcement of steel and aluminium tariffs on Trump’s supposed allies, the markets can at last look forward to a more traditional week where data and central bank policy drives the agenda.
As concerns over Italy subside, for now, President Trump has upped the ante against the EU, Mexico and Canada, with tariffs from midnight on steel and aluminium.
The markets have retreated somewhat from yesterday’s tumultuous response to uncertainty over who will govern Italy, and their stance on the Euro and EU membership.
Breaking into the Australian renewable energy market with a new mode of financing was a great challenge and a golden opportunity for Goldwind. Three deals later, the company’s aiming to power one million Australian homes.
Italian two year bond yields rose 190 basis points overnight. It’s the worst sell off in 26 years, with the distinct possibility that Italians will go back to vote as soon as July.
Italy looks set to go back to the polls. NAB’s Rodrigo Catril looks at the market reaction on today’s Morning Call podcast.
Despite an awful lot of noise in markets, the boringly positive development has been that the central forecast for a slow improvement in Australian and global growth, continues to play out.
The breaking news this morning is that Italy’s premier designate Guiseppe Conte has stepped aside, unwilling to form a government.
There wasn’t a strong response to the news that peace talks between the US and North Korea have broken down.
Italy’s new government, Turkey’s emergency rate hike, the failing China trade deal, the UK’s weakening inflation, slow growth in Europe, tensions over Iran – there’s a lot to be concerned about.
It's been a quiet session overnight. Oil rallied as supply fears rose on Trump’s sanctions imposed on the country this week, but it has since retreated.
The positive news regarding China has seen stocks rise in the US today but there has been little movement on Treasuries or the US dollar.
Steven Mnuchin says the trade war with China is on-hold, for now, after the agreement that will see China supposedly buying more from the US, but not the reported extra $200 billion worth.
President Trump has been making headlines with peace treaties and trade pacts, but what if they don’t happen? North Korea has threatened to pull out and now the President is saying the China talks may not be successful.
NAB and Asiamoney's latest poll on Asian and European investors’ appetite for Australian debt tells a story of consistency and stability as the region presents a safe option amid turbulence - while also offering sustainable opportunities.
In Italy, the populist parties aiming for a coalition Italian government are said to be demanding a €250bn debt write down by the ECB.
US ten-year treasuries were up eight basis points this morning, with the US dollar reaching a new high for the year so far.
The continuing rise in oil prices and rising bond yields in the US – where they have tipped the 3% yield mark again.
Trump seems to be offering a lifeline to Chinese telecoms company ZTE, whilst threatening car manufacturers with a 20 percent import tariff.
It’s been a bumpy day for oil following Trump’s withdrawal from the Iran Deal. But it’s today’s weaker than expected US CPI data that has had the most influence, driving down Treasury yields and giving a boost to share prices.
Markets react firmly to the US decision on the Iran Deal and the news the markets don’t want to hear about the Italian government.
2018 has been exceptionally dry across much of Australia, with knock-on downside to restocker interest and young cattle prices.
With 1.2 million visitors injecting $10 billion into the Australian economy each year, and almost one third of our international students now coming from China, Chinese custom is big business. Alibaba Australia’s MD explains Alipay.
Can China maintain its stable growth profile as trade tensions increase?
Stability in financial markets over 2017 and early 2018 came to abrupt end in recent weeks, with a surge in market volatility and big falls in equity markets and prices for many commodities.
The RBI held the benchmark Repo rate at 6% at its February meeting. This decision was in line with expectations.
The US Debt Capital Markets provided options for issuers.
China’s official data may underestimate the strength of growth in 2017.
NAB’s Securitisation team goes from strength to strength, being the clear house of choice for customers and thought leader in the market.
2017 has been the best year for both issuers and investors since 2006.
The growth of the Reg S bond market has been one of the defining trends of the Asian capital markets in recent years. Driven by the seemingly unstoppable rise of Asian wealth – especially deep-pocketed Chinese investors – US dollar bond sales in the region no longer depend on the participation of US institutions.
2017 was marked by a return to stability following the volatility of recent times and the rise of innovative new products, especially in the green and social sectors.
Uneven flows – how distortions in China’s data paint a very different picture of global trade.
The Indian economy accelerated in the September quarter, recording a 6.3% yoy expansion.
The regional US$ Reg S bond market has become one of the fastest growing debt capital markets worldwide.
As Australia moves beyond the mining boom, we need to secure new sources of growth to ensure our future prosperity.
This independent report for National Australia Bank (NAB) by the Crawford School of Public Policy at The Australian National University, examines the outlook for the South Korean economy and its growing importance in the Asia Pacific region.
Our 2018 forecasts for Asian currencies reflect the view of reduced impact of Fed’s policy normalisation and more confidence about Asia’s external sector performance and overall growth prospects along a global economic recovery.
Indicators point to marginally softer conditions post China’s leadership change
There were very few consistent themes across the commodity complex this quarter.
Changing of the guard - what does China’s new leadership mean for its economy?
While significant progress has been made on liberalising the RMB and opening up the onshore bond and equity markets, there are other structural reforms that need to happen before the floodgates can be thrown open.
Increased global liquidity, Asia’s growing wealth and the rise of the regional investor base have made the US$ Reg S market an increasingly important source of funding for Asia Pacific issuers. NAB sees US$ Reg S issuance from Australian corporates tripled from 2016 to 2017, with ample room to grow.
The NAB Rural Commodities Index rose 2.1% in October, its first monthly gain since May.
The Indian economy has slowed considerably since the first half of 2016.
China’s stable growth continued in Q3, but supported by another credit binge.
Repurposing an old tool – a new life for the Required Reserve Ratio.
China’s old economy surprises on the downside, may point to weaker Q3 growth.
North Korea, China’s Communist Party Congress and Singapore's policy rate decision are on market radar in October, along with Fed’s policy normalisation thereafter.
Another concern for the RBI has been the jump in core inflation (inflation excluding food and fuel).
Tightening the purse strings – China’s foreign investment is slowing in a more closely regulated environment.
All eyes on China’s steel sector.
Beyond reaching institutional investors, socially responsible investment (SRI) assets need to develop sufficient scale and momentum to attract interest from the wholesale markets.
China is set to increase foreign ownership of Chinese debt. In the near term, we expect Chinese bond market inflows north of US$1 trillion, but in the medium term inflows of more than US$2.5 trillion would not be beyond the pale.
US$90 trillion in new investments by 2030 have been estimated as necessary to meet the goals of UNCOP21 to address climate change. National Australia Bank (NAB)'s David Jenkins says the opportunity for green bonds to mobilise capital for this transition to a low carbon economy is immense.
The Indian economy decelerated in the June quarter, growing by 5.7% yoy, the lowest since March 2014.
North Korea, China’s Communist Party Congress and Singapore’s policy rate decision are on market radar in October, along with Fed’s policy normalisation thereafter.
Chinese data generally weaker in July, returning to trend after strong June
Unwinding road ahead – weaker Chinese producer prices providing headwinds for advanced economy inflation
The July NAB Monthly Business Survey showed a continuation of the strong run enjoyed by the business sector. Business conditions rose to their highest level since early 2008, while confidence also strengthened.
There are some signs of hesitation about pushing Asian currencies to significantly stronger levels than currently. While most will still respond to the US-centric factors in the USD price actions, but some domestic concerns could be kicking in.
An improving demand outlook and USD weakness are lending support to much of the commodity complex.
Old King Coal – coal still a big part of China’s energy mix but its role is on the wane
Steady as she goes – economic growth and other key indicators stable in Q2.
Revisions to real GDP growth forecasts this month largely reflect a stronger than expected rebound in coal exports following disruptions from Cyclone Debbie in Q1. Further out, we have not fundamentally changed the tone of our outlook.
Most Asian currencies ended the first half of 2017 stronger vs the USD, this strength has led to the unintended consequences of tighter monetary conditions and worsening terms of trade.
In May, international ratings agency Moody’s announced a downgrade for China’s sovereign credit rating, citing the country’s rising debt as a key factor in this decision.
The NAB Monthly Business Survey was a little softer in May, but still points to a healthy business sector. Business conditions are elevated and confidence is holding up above long-run average levels.
Indian economic growth decelerated in the March 2017 quarter, with real GDP expanding by 6.1% in yoy terms.
Trends stable across the board, no sign of a major economic slowdown.
Focus is now on whether the interest rate differentials between the US and Asia will start to matter for Asian currencies.
OPEC deal was extended a further nine months despite low prices.
Belt and Road Initiative – can the reality of the program meet China’s grand ambitions?
Key indicators a little softer in April, pointing to easing economic growth in Q2.
A confluence of trends will see Asian investors take an expanding role in Australia’s efforts to address its future infrastructure needs, supporting more innovative and customer-centric approaches to infrastructure that meet investors’ financial, sustainability and business development goals.
FinanceAsia and National Australia Bank’s latest poll of Asian bond investors shows strong demand to boost exposure to Australia — and a clear idea of which sectors will reap the benefits.
Economy regained its footing over 2016 GDP. It grew in each quarter in 2016… the first year this has occurred in since 2005.
Short term spike in coking coal masks softer trend for bulks.
China’s income inequality improving but still some long term challenges.
An improving US-China relationship provides a better environment for China’s economy.
In March, the NAB Monthly Business Survey results pointed to an overall healthy economy that is gaining momentum, at least in the near-term.
The USD’s softness has “strengthened”, ironic as it sounds. Perhaps it is more apt to say that the USD is increasingly depicting a soft Trump environment.
As more investors seek to deploy sustainable capital, National Australia Bank says green bond issuers are being offered a golden opportunity.
Rise of the machines: could automation help sustain China’s long term growth momentum.
While the health and aged care business stream attracted 130 Australian delegates and almost as many Chinese attendees at the first day of talks in Beijing, a planned mining stream was scrapped due to low interest.
Global reflation continues, political risks to navigate
An encouraging start to 2017 – although strength still comes from the old economy, with retail trends disappointing.
Our G10 FX Strategists still believe that the dollar can end 2017 higher than it is today, but a resumption of an appreciation trend could well be delayed until H2 2017.
Summer has brought extremely volatile conditions to Australia’s cropping districts. While much of eastern Australia has baked in an extraordinary heatwave, Western Australia has suffered substantial flooding.
The International Monetary Fund expects India to retain and strengthen its recently acquired tag of being the fastest growing economy in the world.
Infrastructure spending could support growth to different extents, which in turn will support equity inflows.
From a political perspective, President Trump’s decision to withdraw from the TPP reflected US sentiment against globalisation, particularly in the mid-west rust belt.
Prices across the base metals complex have generally been stronger than expected in recent months, prompting some upward revisions to our price forecasts
If you’ve been thinking about improving the efficiency of your importing or exporting business with Australia’s largest trading partner, here’s a more efficient way to settle trade transactions in China.
China records a comparatively strong finish to 2016, but Trump trade uncertainty adds downside risk to our moderate easing forecast for 2017.
Over the medium term, the use of the RMB as both a trade settlement currency as well as a reserve currency remains a priority. This suggests the scope for an eventual “strong RMB policy".
Our outlook for agricultural production is highly reliant on the climate outlook
Think ‘China’ and do you think of massive competition or massive potential?
Mere speculation of a trade war could send the USD/CNY to around 7.2 as market starts to price in this risk premium.
Experts from National Australia Bank say the challenges of climate change and countries' need for infrastructure funding mean the green bond market has enormous potential.
China’s economic stability continued into October, however President Trump poses downside risks to the outlook
China’s economy continued to track sideways – but weaker real estate could cool conditions in Q4
We revisited and reassessed our currency forecasts for Asia, in light of a base case scenario of a Clinton victory as well as the lesser probability scenario of a Trump victory.
The RBI cut the policy rate by 25bp to 6.25% at the October meeting.
The more favourable USD has been a source of support for most commodity markets in the first half of 2016, but heightened uncertainty has seen additional volatility across financial markets, including commodity markets, more recently.
Asia-based bond investors surveyed by FinanceAsia and National Australia Bank are seeking safety in higher-rated credits.
A potential “time of stress” with the US elections and FOMC meetings in November and December may cause large swings in risk appetite and global liquidity conditions.
The bigger picture – A Global and Australian economic perspective
No surprises in the latest data, weaker real estate sector leads to a softening in the growth profile
While the latest development may underpin the broad USD’s strength, we will not rule out some differentiation in Asian FX movements.
A rebound in real estate investment, new construction activity and industrial demand for related products – such as steel and cement – helped to underpin economic growth in the first half of 2016.
The “tsunami warning” has been lowered and the Brexit-triggered shockwaves to financial markets was surprisingly shortlived. The global financial markets have renewed their risk appetite and developed a tentative pattern of hunting for yield.
Uncertainty around the outlook for commodity prices has ramped up further in the wake of the recent Brexit decision.
"Brexit" has engendered the risk of further fiscal and monetary easing in Asia and eventually, will renew focus on the widening growth and interest rate differentials with the US in relation to Fed’s policy tightening bias in 2017. We still view this risk as under-priced and an instrumental driver to sustain firmer USD strength ahead.
The RMB flexibility helps to ensure that China is able to retain a meaningful degree of autonomy in its monetary policy. The authorities however are still keeping the volatility of the RMB significantly lower than the DXY and this is likely to persist.
Against this strong USD background, we have identified KRW, SGD, MYR, THB, and TWD as being the most vulnerable over the next few months on account of their low carry.
The market is still fairly ambivalent over the prospects of USD strength and for the time being, markets are not likely to be directional in nature – any positions would have to be tactical rather than strategic.
Within Asia, those currencies with a greater sensitivity to global moves, like the KRW and SGD, have been amongst the bigger beneficiaries in March.
We think Asian currencies are likely to still be tethered to the RMB, which is still likely to be subject to the authorities’ allowing of corporate outflows to dominate.
A macro strategist’s view on Asian economies and markets
With U.S. interest rates on the rise, the focus for Asia is likely to shift to the relative ability to cope. Key highlights: With the U.S. Federal Reserve embarking on a path to rate normalization, the focus in Asia is likely to shift to which economies are best placed to cope. Asia is likely to […]
A macro strategist’s view on Asian economies and markets
Under NAB’s forecasts, China’s economic growth is expected to slow from 6.7% in 2016 to the Five-Year Plan target of 6.5% in 2017.
A macro strategist’s view on Asian economies and markets
A macro strategist’s view on Asian economies and markets
A macro strategist’s view on Asian economies and markets
A macro strategist’s view on Asian economies and markets
A macro strategist’s view on Asian economies and markets
A macro strategist’s view on Asian economies and markets
A macro strategist’s view on Asian economies and markets
A macro strategist’s view on Asian economies and markets
Patrick Vizzone, Regional Head of Food & Agribusiness, Asia, Institutional Banking reflects on how the outcomes of last November’s Third Plenary Session of China’s Communist Party’s Central Committee may shape the Australian agriculture sector.
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