The Morning Call – April 2018
Mnuchin packs for China; US Treasuries shy of 3 percent
Monday 23rd April 2018
There’s hope that the tariff battle between China and the US could be quickly resolved, with Steven Mnuchin said to be preparing for a visit to resolve differences. Phil Dobbie asks NAB’s Rodrigo Catril about the impact this development could have on the markets this morning. They also discuss rising Treasury yields – could they push over three percent? Plus oil prices, mixed attitudes to European growth ahead of PMI figures today.
Inflation. Watch out, it’s coming.
Friday 20th April 2018
Oil and metal prices could be the root cause of future inflation pressures, not helped by US sanctions against Russia. As NAB’s Tapas Strickland explains to Phil Dobbie, the rising prices have had an impact on government bond yields in the US and Europe. US equity indices are largely down, not helped by some disappointing earning results. In the UK soft retail figures follow yesterday’s weak inflation data, but its only had a marginal impact on expectations for a May rate hike from the Bank of England. They also discuss Australian employment data, New Zealand CPI and Canadian CPI, later today.
Rising commodity prices, stalling inflation, a flattening curve and cautious Canadians
Thursday 19th April 2018
NAB’s David de Garis talks Phil Dobbie through a busy day for market news, starting with a big jump in commodity prices. Then there’s the weaker than expected inflation figures in Europe and the UK, the Bank of Canada’s caution over “future policy adjustments” and concerns over the flattening yield curve for US government bonds. On the positive side President Trump is appearing as the dealmaker over North Korea, and UK Remainers might be enjoying the ongoing difficulty Theresa May is having on passing legislation for her country’s extraction from the EU. They also look ahead to CPI figures for New Zealand and Aussie employment data due out this morning.
Stocks up, forecasts unsteady, China gives ground
Wednesday 18th April 2018
It’s been another day where US stocks have risen (a lot) based on strong earnings figures. Phil Dobbie talks to NAB’s Tapas Strickland about how the positive mood from investors means tweets about tariffs are falling on deaf ears. But there has been positive news with a concession from China, tempered by mixed forecasts from the IMF. They also look at earnings and Brexit in Britain, retail sales in China, takeouts from the RBA minutes and a look ahead to the Bank of Canada meeting tonight.
Syria blows over, strong earnings, new Fed vice chair, struggles for Brexit and Abe
Tuesday 17th April 2018
The influence of the weekend’s tensions in Syria seem like a distant memory this morning, as the markets focus on corporate earnings. But, as Phil Dobbie discusses with NAB’s Rodrigo Catril, politics is never far away. President Trump’s attorney was in court today, Shinzo Abe is tipped to resign by June and Theresa May is facing a challenge in her Brexit Withdrawal Bill. There’s also word on the next Vice Chair of the US Federal Reserve. We also discuss US retail sales, and the data to look out for over the next 24 hours.
Syria Strikes Unlikely to Hit Markets
Monday 16th April 2018
Missile strikes on Syria by the US and her allies were hardly surprise news – the only uncertainty was the timing. Phil Dobbie asks NAB’s Ray Attrill whether that means the events of the weekend will have much, or any, reaction on the markets this morning. They also discuss China’s slowing credit, the US’s falling consumer confidence and the volatile nature of equity markets right now. Plus, they look ahead to today’s US retail figures.
Equities bounce back (again) as war talk eases
Friday 13th April 2018
Every day lately takes equities in a new direction in the US. Today they’re up. On today’s Morning Call podcast Gavin Friend in London explains this improvement in risk appetite as President Trump hints in a tweet that a missile strike on Syria might not be imminent. That, and easing expectations on the extent of a trade war, seem to be giving some confidence for investors. Phil Dobbie also asks Gavin about minutes from the last ECB meeting and today’s unexpected rise in the pound.
US missiles and inflation – both are on the horizon
Thursday 12th April 2018
When a President tweets that US missiles “will be coming” to Syria, incorporating a challenge to Russia, it’s expected that markets might react. As Phi Dobbie discusses with NAB’s David de Garis equity markets responded a little but clawed back some of the losses as the day progressed. So, if that was the key influence in the first part of the overnight session, what’s driving market sentiment now? The FOMC minutes drew some attention but, it seems, without Trump’s access to Twitter things would be rather quiet.
President Xi boosts equities and commodity currencies. But for how long?
Wednesday 11th April 2018
As President Xi spoke at the Boao Forum overnight US equitie is resumed their upward path, and there were strong gains on commodity currencies. On today’s podcast Phil Dobbie asks NAB’s Ray Attrill what the Chinese President said to give the market such confidence, particularly when US politics seems mired in uncertainty, from the Mueller investigation, through to Zuckerberg’s congressional hearing and developments on Syria. Data wise, US CPI figures are the most significant numbers today – Ray tells us what to expect.
Markets rebound, but China considers currency as a tool in a trade war
Tuesday 10th April 2018
In the US the equity markets bounced back on Monday after Friday’s losses, with renewed interest in tech stocks. On this morning’s Morning Call with Phil Dobbie, NAB’s Tapas Strickland suggests the gains suggest investors have assumed, once again, that the rhetoric has more to do with Trump’s Art of the Deal rather than the expectation of a full-blown trade war. Meanwhile Russian shares, currency and aluminium prices have been hit by US sanctions that kicked in this week, whilst closer to home the latest NAB Business Survey will provide insights this morning on the state of the Australian economy.
Trade war, real war and soft payrolls
Monday 9th April 2018
Equity markets were hit again on Friday as President Trump ups the rhetoric on trade talk with China, threatening to include another $100b of imports. Phil Dobbie talks to NAB’s Rodrigo Catril about the impact this had on Friday’s markets and the expected spillover today. The reaction wasn’t helped by a weaker than expected set of payrolls data in the US, and now there’s the heightened tensions in Syria following a chemical attack over the weekend. With today very light on data releases it’s clear the markets will be driven more by geopolitics than by data.
Stocks jump, rhetoric eases; all eyes on the job numbers
Friday 6th April 2018
It’s been a big session overnight on US and European stock markets. As Phil Dobbie discusses with NAB’s Ray Attrill, it seems the market is accepting that trade talks will somehow resolve the US trade deficit, which incidentally took a turn for the worse with February’s figures. All eyes now, though, are on the US non-farm payrolls data – one of the key data sets for influencing those Fed dot points.
Shares yo-yo on tariff tit for tat
Thursday 5th April 2018
President Trump tweeted that the US has already lost the trade war and has everything to gain. Yet the markets didn’t see it that way as China announced tariffs on US cars, aircraft and soybeans. Phil Dobbie talks to NAB’s Rodrigo Catril about how the markets reacted today – the volatility is constrained to equity markets right now, but could that spread if the rhetoric is turned up a notch? Plus, the Kiwi and Aussie dollars were the only two major currencies to show significant moves overnight, why is that? And what to look out for in data releases today.
The FAANGs bite back; concerns on US funding costs
Wednesday 4th April 2018
Technology stocks were hit yesterday with fears that the president would somehow “go after” Amazon, but it seems it was largely rhetoric. Instead, as NAB’s Tapas Strickland discusses with Phil Dobbie, the risk-off mood from yesterday has subsidised, for now. They also discuss why Libor is so much higher than OIS, whether it will remain and what it means for US funding costs. Finally, they look at yesterday’s RBA meeting, today’s Aussie retail sales figures and other data releases of the day.
China fights back whilst US equities re-correct
Tuesday 3rd April 2018
China has listed 128 US imports that will be subject to new tariffs in tit-for-tat retaliation. Phil Dobbie asks NAB’s David de Garis if this is the end, or the start of it? Plus, a sharp reversal in US equities – much of it from technology stocks, not helped by a Trump tweet taking aim at Amazon over the weekend. They also look at manufacturing figures from the US and China over the weekend, and look ahead to today’s RBA meeting. Welcome back to The Morning Call.