The Morning Call Podcast – June 2017
A good old-fashioned sell-off
Friday 30th June 2017
Today sees more of what we saw yesterday. The coordinated message from major central banks this week, hinting at rate rises this year, has seen a sell-off in the bond market and equities. As Phil Dobbie discusses with NAB’s David de Garis, the Euro, Sterling and the Canadian dollar have risen to levels they haven’t seen for a while. So where is the US in all this? And why, with the RBA remaining quiet on monetary policy, is the Aussie dollar also on the ascendency? Could a rate hike here by imminent too?
A coordinated plan to raise interest rates?
Thursday 29th June, 2017
Central Bankers have agreed to get their story straight during their meeting in Portugal. From many quarters, the talk is now all about lifting rates, even from those who have talked against the idea in the very recent past. Phil Dobbie asks NAB’s Tapas Strickland how this shift in attitude is changing expectations for rate rises over the remainder of the year, in the US, the UK, Europe and Canada. Plus inflation data from Germany tonight. And a big surprise from President Trump – “a great, great surprise”.
Fines, Ransoms and Rate Rises
Wednesday June 28th, 2017
European bonds reacted sharply to a rosy picture of the Eurozone economy painted by Mario Draghi this morning. Whilst in London Janet Yellen was doing a similar sell job on the US economy. As NAB’s Rodrigo Catril discusses with Phil Dobbie, it seems in Europe at least we can expect central bank action sooner rather than later. So what about Canada? Maybe we’ll find out tonight. Meanwhile markets have reacted to another spate of cyber-attacks and to Google’s record breaking fine in Europe. And we thought it was going to be a quiet night.
Europe and US, Perfectly Imbalanced
Tuesday 27th June, 2017
ECB Governor Mario Draghi and former Fed Chairman Ben Bernanke both spoke out against inequality at the central banking forum in Portugal (read Bernanke’s speech here). Whilst neither were market moving, it highlights an issue the world faces. Phil Dobbie asks NAB’s Dave de Garis whether this means markets should pay more attention to government policy. Also, a spike in demand for gold, a rise in oil prices and a lot of Fed speak. Plus Theresa May has formed her strong and stable deal with the DUP, and it only cost £1bn.
We finished where we started. Time for a holiday?
Monday 26th June 2017
Last week was quiet for data releases and, with no real geopolitical news, there was not much movement in the markets. So, could this week be déjà vu all over again? Phil Dobbie asks NAB’s Ray Attrill. The underlying question is, of course, what’s the best way out of the low growth, low inflation story that remains prevalent in most economies? Aside from tackling that big question, we highlight what to look out for that could drive the markets this week.
Healthcare reforms on a lifeline; oil doing better; UK lets EU citizens stay
Friday 23rd June, 2017
It looks like President Trump’s healthcare reforms might be in a critical situation, with at least four Republican senators refusing to back it. Phil Dobbie asks NAB’s Tapas Strickland what impact a defeat could have on the markets. Also, oil has bounced back, helping some commodity currencies, but not the Aussie dollar. Plus Theresa May’s olive branch to EU nationals living in Britain – a further sign of a softer Brexit.
Oil falls deeper; Queen usurped by BoE economist
Thursday 22nd June 2017
In the UK, Her Majesty rattled through the government’s plans for the next two years before charging off to Ascot. There was a mooted reaction on the markets, but moments later word came through that, at the last Bank of England policy meeting, chief economist Andy Haldane almost voted to raise rates. As NAB’s Rodrigo Catril explains to Phil Dobbie, it bolstered the pound today, whilst commodity currencies took a hit as oil prices fell still further.
No slam dunks – for rate hikes, OPEC, Brexit or US tax reforms
Wednesday 21st June 2017
Overnight the Fed’s Charles Evans said a further rate hike this year was no “slam dunk”. As Phil Dobbie discusses with NAB’s David de Garis, there’s lots we can no longer take for granted. Like OPEC’s plans to control oil prices; oil is now below where it was last August. Mark Carney expects the UK economy to struggle through Brexit, a process which itself is not guaranteed to reach an outcome. And Theresa May’s deal with the DUP is now faltering, making her Queen’s speech unlikely to sail through Parliament. Whilst US Treasury Secretary Steve Mnuchin has said he plans to see his tax reform program finished this year, but with the looming debt ceiling, that’s no slam dunk either.
Lots of Central Bank talk
Tuesday 20th June 2017
There’s a theory on this morning’s edition of the Morning Call – Phil Dobbie asks NAB’s Rodrigo Catril whether the US dollar rose overnight on the absence of any data. There’s been a few data points that suggest the economy might be weakening and inflation might be slipping, but that wasn’t reflected in the view of the Fed’s William Dudley. So, in the continued absence of key data, will the markets be driven almost exclusively on the words of central bankers?
Macron’s power boost; May in Disarray; Dollar Dwindles
Monday 19th June 2017
No surprise in the French election. Most of those who bothered to vote, supported Macron’s party for the National Assembly. Over the channel May looks in disarray. And, as we embark on a quiet week for data, Phil Dobbie discusses with NAB’s Ray Attrill the changing structural forces that seem intent on holding back inflation. Is underemployment partially responsible? How the economy is shifting is perhaps demonstrated with the Amazon intention to purchase Wholefoods, promising lower prices driven by greater efficiencies – even more part time workers perhaps. As to more immediate influences, Ray suggests the biggest driver on the markets this week could come from the known unknowns – perhaps Brexit related, or something from President Trump’s twitter handle.
A Delayed Response to the Fed
Friday June 16th
The dollar has a good day today as the markets absorb yesterday’s Hawkish tone from the Federal Reserve. But, Phil Dobbie asks NAB’s Tapas Strickland, can we really expect inflation to start rising given the string of weak data lately. Plus, the Bank of England were close to raising rates – there were two votes in it. And Australia’s better than expected employment figures weren’t enough to keep the Aussie ahead of the US dollar for long.
Market Reacts as Fed Does Exactly As Expected
Thursday June 15th, 2017
The US Fed lifted interest rates by quarter of a percent, exactly as expected. Phil Dobbie asks NAB’s David de Garis why, if the Fed stuck to its script, have we seen any market reaction whatsoever. Was it overshadowed by weak CPI and retail sales data overnight? Plus, the Aussie dollar a quiet achiever overnight, and what to expect in New Zealand’s GDP figures today. And is the Kiwi the new safe haven? And, a possible Brexit scenario for Britain.
Pound bounces back; a quiet Sessions; Fed ready to go
Wednesday 14th June 2017
It’s the day before the US Fed rate decision. Phil Dobbie asks NAB’s David de Garis why the dollar has weakened a little, when not much has changed. Jeff Sessions is giving his testimony but seems to be saying very little. Sterling and the Canadian dollar are the two big movers, even though Britain’s path forward is still very muddy and Brexit negotiations have been pushed back as the clock continues ticking. Plus, data from China today.
UK pounded, Canada soars, Tech stocks dip, US waits
Tuesday 13th June 2017
Theresa May’s government is anything but ‘strong and stable’, her mantra throughout the UK election campaign. Phil Dobbie asks NAB’s Ray Attrill if continued uncertainty about the makeup of the government could hit Sterling even harder. Meanwhile, the Canadian dollar has risen 1 percent as the Senior Deputy Governor of the BoC suggested the possibility of raising interest rates. Elsewhere, we wait for the outcome of the FOMC decision on Thursday, and ferret through today’s NAB Business Survey for indications of how the local economy is tracking.
May’s Day, Draghi’s Delays and Comey’s Questions
Friday 9th June 2017
The exit polls show that the Tory government could lose a lot of ground, potentially losing 17 seats and not having enough to win outright. Meanwhile James Comey’s testimony has attacked the personality of the President but stopped short of offering fuel for an impeachment. It amounts to his word against Donald Trump, with little market reaction. And, as Phil Dobbie discusses with the NAB’s Tapas Strickland, the ECB sent mixed messages overnight – the economy is improving but QE won’t be lifted any time soon. All that, plus yesterday’s Aussie balance of trade figures and what to look out for today.
Oil prices plunge, Aussie on the rise, Comey’s testimony is out
Thursday 8th June 2017
The impacts of Super Thursday will take a long time to reach us here, with the UK polls not closing till tomorrow morning. In the meantime, we speculate on any signals from the ECB tonight and look at Comey’s opening testimony, which is already out there in the public domain. And, as the NAB’s Ray Attrill discusses with Phil Dobbie, this session has seen a surprise drop in oil prices. They also pick apart yesterday’s Aussie GDP figures, that were more positive than expected.
Nervous tension in the calm before Super Thursday
Wednesday 7th June 2017
Tomorrow has been flagged Super Thursday, with the UK election, the Comey testimony and the ECB monetary policy decision. As NAB’s Tapas Strickland discusses with Phil Dobbie, the markets have been a little jittery in anticipation, showing the common signs of a risk-off mood, although that could ease as the day progresses. Yet the Aussie dollar, often susceptible to risk concerns, rose again ahead of today’s GDP figures.
Qatar Isolated; Aussie optimism ahead of GDP results
Tuesday 6th June 2017
Saudi Arabia, UAE, Bahrain and Egypt have all cut diplomatic ties with Qatar over allegations that they are supporting terrorism. As NAB’s Rodrigo Catril explains to Phil Dobbie, it’s had a marked impact on oil prices. Meanwhile, the Aussie dollar was the strongest performing currency, with many expecting a positive read in the GDP figures released tomorrow. But are they right to be so optimistic?
A week of uncertainty?
Monday 5th June 2017
It’s a week with a lot of unknowns. Britain’s election looked like a shoo-in for the Prime Minister but polls now have her leading by a whisker. Escalating terrorism adds to the unease. The US received weaker than expected jobs data on Friday and Trumpism continues to add colour and uncertainty. China is still growing quickly, but could they face new trade arrangements with the US and Europe that could slow their lead? And the Aussie dollar, it’s up and down. Phil Dobbie talks to NAB’s Rodrigo Catril at the start of a week of uncertainty.
America First, Climate Second – Trump pulls out of Paris Accord
Friday 2nd June, 2017
President Trump has just announced the US will remove themselves from the US Paris climate accord. On today’s podcast Phil Dobbie asks NAB’s David de Garis what the likely market reaction will be – and the ongoing significance. There’s also discussion on the narrowing polls in the UK election, the weakening of the Aussie dollar and the path for rate rises in the US.
Could June see the end of May?
Thursday 1st June 2017
A YouGov projection has suggested that Theresa May’s government could lose so many seats in next week’s UK election that it could be a hung parliament; probably not the ‘strong and stable’ government she has been campaigning for. As Phil Dobbie discusses with NAB’s Rodrigo Catril, the prediction hit the pound momentarily. A TV debate occurring right now could also influence the polls. They also discuss the faltering US dollar and equity markets, and a wealth of data, including Aussie capex and retail sales figures.