NAB Morning Call Phil Dobbie

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

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Wednesday 3rd July 2024
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US shares rallied late in the session, on the back of comments from Jerome Powell. So what did he say? That’s the first question Phil puts to NAB’s Rodrigo Catril on this morning’s podcast. Meanwhile, Europe's inflation barely moved and unemployment is sticking close to where its been for more than a year. There’s fresh concerns about the French election at the weekend too. Today Australia’s retails sales are out along with US Services ISM, which should show further slowing of growth. And the US knocks off early in readiness for the 4th July holiday tomorrow.

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

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

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

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

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