The Morning Call – June 2018
Euro trashed on ECB hike delays
Friday 15th June 2018
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. As Phil Dobbie discusses with NAB’s David de Garis, the response has been a sharp fall in the Euro, pulling the Aussie down with it and helping the US dollar to continue its rally. They also discuss the US tariffs on China and bad news for Theresa May whose Withdrawal Bill seems to have unwound itself. Plus a look at data and events to follow today.
Fed adds a dot, ECB tonight, tariffs from Friday
Thursday 14th June 2018
The US federal Reserve lifted interest rates this morning, as expected. They also added to their dot points, meaning they envisage two more rate rises this year. We can expect no movement at the ECB tonight, but will this be the meeting they announce the timetable for the ending of QE. NAB’s Ray Attrill talks Phil Dobbie through a busy day for the markets, which also includes UK retail sales data, China’s Industrial Production numbers, and Aussie employment figures. And from left field, President Trump is reportedly set to impose tariffs on China from tomorrow.
On FOMC-eve, a Bromance, a Brexit win and the NAB Business Survey
Wednesday 13th June 2018
There was little market reaction to the big deal and emerging bromance between President’s Kim and Trump. As Phil Dobbie and NAB’s Rodrigo Catril discuss, there was considerably less love in the House of Commons where the Brexit process gets progressively more complex, but is likely to feature more parliamentary involvement from hereon in. Ivan Colhoun, NAB Markets’ Chief Economist also joins in to highlight the key points from yesterday’s NAB Business Survey, and Rodrigo explains why the IOER rate is something to watch for in tomorrow’s FOMC announcement.
Trump’s one – on – Un just hours away
Tuesday 12th June 2018
President Trump is hours away from a one-on-one meeting with Kim Jong Un (just the two of them, plus interpreter), having left the G7 talks in a state of disarray. Phil Dobbie asks NAB’s Gavin Friend if we can expect any market reaction to the Singapore Summit, whichever way it goes. They also discuss 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.
G7; Brexit; North Korea – Deal or No Deal?
Friday 8th June 2018
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. It might be the same with the North Korea summit that the President discussed today, saying it will take several meetings to get anywhere. Instead, NAB’s Gavin Friend pays attention to continued strength in the Euro, the outcome of next week’s ECB meeting and what it all means for emerging markets. He also discusses the Tory party’s Brexit talks today that almost saw David Davis, the Brexit secretary, resigning over the whole thing. Who can blame him!
Will the ECB unwind? Less news means more risk-on.
Thursday 7th June 2018
Will they or won’t they? 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. Meanwhile, NAB’s Rodrigo Catril says a slow news week is adding to a risk-on mood, but it might not last till next week. On today’s podcast he talks to Phil Dobbie about the G7 meeting, the shaky situation in Italy and how the strong GDP figures yesterday have helped the Aussie dollar. A different story in South America where the Brazilian central bank is having difficulty stopping the slide of the Real.
Oil, NAFTA and the Conte Controversy
Wednesday 6th June 2018
It seems Giuseppe Conte didn’t make all the right noises when he gave his first public address as the Italian Prime Minister today. As NAB’s Tapas Strickland explains, the talk hit Italian bonds and reminded investors of EU uncertainty. Oil has also taken another bit it on talks of increased production, ahead of an OPEC meeting later this month. Plus, 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.
Trade war? What trade war?
Tuesday 5th June 2018
The markets seem to be ignoring the risk of retaliatory action on trade, at least for now. That could change at the G7 meet later in the week. For now, though, the markets have switched back to risk-on, helping the Aussie dollar rise faster than any of the majors this morning. Phil Dobbie talks to NAB’s David de Garis about the data that’s driving this positive mood, whether its false optimism, and whether we can expect to see the pound continue to fall as the EU Summit draws nearer.
And now for something completely normal
Monday 4th June 2018
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. Phil Dobbie asks NAB’s Ray Attrill whether, after strong payrolls data from the US on Friday, we can expect to see indicators returning more closely to where they were before the melodrama last week.
I feel like tariffs tonight
Friday 1st June 2018
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. Phil Dobbie talks to NAB’s Gavin Friend about the market reaction. They also look at rising inflation in Europe, the vote of no confidence in Spain and speculate on tonight’s non-farm payrolls data in the US. Plus, how the President is rehearsing for his meeting with Kim Jong Un this month.