The Morning Call – May 2018
European bonds hit by Italian populism
Thursday 17th May 2018
In Italy, the populist parties aiming for a coalition Italian government are said to be demanding a €250bn debt write down by the ECB. Phil Dobbie asks NAB’s Gavin Friend whether they’re likely to get it, what the reaction has been and whether Greece could be joining the queue. Meanwhile, US bond yields rise further and the US dollar is back on the rise. They also look at the Aussie and Kiwi dollars, both strong performers on the currency markets this morning.
Treasury yields hit four-year high, US dollar reaches year’s peak
Wednesday 16th May 2018
US ten-year treasuries were up eight basis points this morning, with the US dollar reaching a new high for the year so far. Phil Dobbie talks to NAB’s David de Garis about the reasons behind the bond sell-off, which has been accompanied by a drop in shares. They also look at the UK’s positive wage data overnight and ask what it would take for Australia’s wage price index today to move markets. The Aussie dollar has already taken a hit from slowing investment in China.
Oil rises on unrest; US and European yields boosted
Tuesday 15th May 2018
This morning, Phil Dobbie talks to NAB’s Tapas Strickland about the continuing rise in oil prices. There was a sharp increase today with increased tensions in the Middle East, particularly after the unrest at the Gaza border. They also look at rising bond yields in the US – where they have tipped the 3% yield mark again – and Europe, on the back of comments from ECB’s Villeroy de Galhau. Plus, the widening gap between Kiwi and Aussie currencies and a look ahead to some of today’s data releases.
Trump blows hot and cold on tariffs
Monday 14th May 2018
President Trump seems to be offering a lifeline to Chinese telecoms company ZTE, whilst threatening car manufacturers with a 20 percent import tariff. NAB’s Ray Attrill suggests the concession to China is a positive step in trade relations, whilst the car tariff is unlikely to be endorsed. They also discuss concerns of the flattening yield curve, Draghi’s talk of a Euro-fund to protect countries in future crises and the fate of the Aussie dollar at the start of a week that is very light on fresh data.
Iran makes oil bumpy, weaker CPI pushes yields lower
Friday 11th May 2018
It’s been a bumpy day for oil one day on from President Trump’s withdrawal from the Iran Deal. But as NAB’s Gavin Friend explains, 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. Phil Dobbie also asks Gavin why the pound fell when the Bank of England did exactly what was expected – keeping interest rates on hold. They also discuss Adrian Orr’s statement at the RBNZ yesterday.
US Treasury Yields, Stocks and Oil Up on Iran decision fallout
Thursday 10th May 2018
The markets have reacted firmly to the US President’s decision on the Iran Deal yesterday, even though other signatories have spoken out against him. Phil Dobbie talks to NAB’s Rodrigo Catril and asks if this could be another case of Trump taking another leaf out of his ‘Art of the Deal’ book. Meanwhile US 10-year treasury yields tip over three percent again, even with $25 billion new ones being auctioned. They also look at the RBNZ and Bank of England announcements today, tonight’s US CPI data and the news the markets don’t want to hear about the Italian government.
Trump pulls a hard exit from the Iran deal
Wednesday 9th May 2018
President Trump has announced the US will reinstate tough economic sanctions against Iran, with the threat of secondary sanctions against those who continue to support the regime. As NAB’s Tapas Strickland explains to Phil Dobbie, the announcement reversed an earlier sharp fall in oil prices. We can expect to hear more from Iran’s trading partners today, including Europe, Russia and China. There’s also discussion on more positive vibes from the US Fed, last night’s Australia Budget, Theresa May’s split cabinet and the risk of another election in Italy.
Oil’s four year high on Iran talk; Tonight’s Budget
Tuesday 8th May 2018
Oil prices reached a new high overnight ahead of President Trump’s decision tomorrow on whether to re-impose sanctions on Iran. Phil Dobbie discusses the shift higher with NAB’s Ray Attrill. They also look at business conditions in Australia, retail sales, emerging markets, China’s trade figures and Jerome Powell’s speech in Zurich this afternoon. And will tonight’s Aussie budget satisfy the ratings agencies?
The week ahead for the Dollar, China, Iran, Argentina and Brexit
Monday 7th May 2018
Will the US dollar rally continue this week? Phil Dobbie puts the question to NAB’s Rodrigo Catril at the start of what promises to be a busy week for traders. They discuss the take-outs from Friday’s US payrolls data, the tough talk on trade with China, Friday’s sudden interest move by Argentina’s central bank (and what it means for emerging markets), a UK cabinet divided on Brexit, and what happens when President Trump pulls out of the Iran nuclear deal. It’s going to be a busy week.
Markets a little testy ahead of payrolls; both sides tight lipped on China trade talks
Friday 4th May 2018
The S&P500 fell a lot in early trade, testing some technical levels before regaining most of the ground. The US dollar has also retreated. Phil Dobbie asks NAB’s David de Garis what is driving his risk-off tone – is it data driven, concern over the China trade talks, or anticipation of tonight’s non-farm payrolls data. Meanwhile, another piece of weak data for Europe and the local council elections in the UK, a litmus test to add to Theresa May’s list of worries.
Is it ‘Mission Accomplished’ for the Fed?
Thursday 3rd May 2018
On Bloomberg this morning one analyst described the US Fed statement as a sign that it was ‘Mission Accomplished’. Phil Dobbie asks NAB’s Rodrigo Catril if that really is the case. Words from the Fed have had little impact on the markets, across all sectors, except oil and gold, which rose on the news that not much has changed. They also discuss Europe’s GDP figures, US trade talks with China and they look ahead to today’s data releases.
Soaring dollar as US leaves the pack behind
Wednesday 2nd May 2018
Today sees a continued strong run on the US dollar. NAB’s Gavin Friend suggests the move reflects the US economy gaining momentum, whilst other economies are failing to keep pace. Phil Dobbie asks Gavin whether this adds to the case for a third rate hike in the US this year. It’s a different tale in the UK, where poor manufacturing data has hit the pound hard. And, in Australia, Philip Lowe continues with the ‘steady she goes’ approach to the local economy.
Iran is Trump’s next challenge; RBA ready to sit on their hands
Tuesday 1st May 2018
Just as the South Korean President suggests Donald Trump should be awarded a Noble peace prize, Israel’s Netanyahu accuses Iran of lying over it’s nuclear aspirations. Phil Dobbie talks to NAB’s Tapas Strickland who suggests the markets are getting used to the US President’s style, and that could ease concerns over future Trumpisms. They also discuss what’s become a familiar tale of late, strong data from the US and slightly less bullish numbers from Europe. And they look ahead to today’s RBA meeting – we know rates will stay on hold, but what else will be said?