A less confident US, a more divided Germany
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Why did the US Services PMI fall into contraction and what does it signal for the economy?
Well it's not all going totally swimmingly in the United States. The services PMIs unexpectedly fell on Friday. Shares are well down, the VIX is up, and consumer expectations for inflation is on the rise as well. And polls showing there's not a huge amount of support for some of Trump's policies right now. But today the focus is going to be on Germany, where the poll results weren't a big surprise, but it does show just how much jockeying for position there has to be to form a workable government. It's Monday the twenty fourth of february twenty twenty five. It's the morning call from Nab. Good morning. So the US dollar lifted a bit on Friday, but marginally down on the week. The Canadian dollar lost a third of one percent at the end of the week.
The Aussie was down two thirds of one percent, down below sixty-three point six US cents, but it's back up above that this morning. And if you look at the year so far, it's up almost two point nine percent after a fairly momentous fall in the last few months of last year. Bond yields are falling, perhaps a a a sign of the uncertainty that we're going to talk about. Today. Ten year Treasury is down seven basis points on Friday, down twenty one basis points in the last month. A similar story for Canada, down ten basis points on Friday, down twenty two basis points over the month. Uh in Europe it's a bit more tempered. So German ten year bundles down six basis points on Friday, but only eight over the month.
And the same story for shares. So the Eurostocks fifty was up a quarter percent on Friday, whereas the S P five hundred was down one point. seven percent. It was the same for the Dow and a two point two percent drop in the Nasdaq and the Hang Seng up four percent on Friday. But if we look over the month, the S P down one point four percent, the Eurostocks fifty up four point nine percent, the Hang Seng up seventeen percent in the month. And also today oil is uh well down at the end of the week as well two point nine percent off WTI, two point seven percent off Brent. So Not such good numbers for the United States and there's more in that vein.
How are German election results reshaping coalition talks and European stability?
Uh we'll look at all of that in a second with Nabs Rodrigo Catrill. First of all though, Rodrigo, the the new news, uh two opinion polls from the German elections which have just finished, those polls almost exactly the same. So the C D U C S U Alliance on twenty nine or thirty percent, the AFD uh uh just under twenty percent, Olaf Schultz party, the S D P third place at sixteen percent. So to form a government, the C D U and S D P I mean they're nowhere near fifty percent, that means there's going to be quite a bit of negotiating over hopefully just over the next few days. Hopefully.
Um it could be more than just a few days, uh Phil. But uh Well that was saying the sting
that was saying that the sting in the tail in our weekend podcast, wasn't it? That this could take months.
Yes, I know. Uh 'cause you have to work out when the summer uh begins in Europe and that's July, so Mm um it could be quite a lengthy and protracted exercise, uh which is not ideal given of course that uh Germany is a key player for Europe and and they need to get the act together in in many respects, uh in terms of defence, in terms of fiscal spending and so on. So um uh what it what is also interesting is that um uh some of the smaller parties uh there's a bit of uncertainty uh as to whether uh two of them will make that five percent cutoff, um which also complicates the outlook for a coalition. Um so it it remains to be seen um um you know whether Um Well at this stage it looks like the C D U, C S U
uh won't be able to just form a coalition with one party. Uh it may have to uh involve other parties and in doing so it also means that um you know you have to a bit do a bit of trading in terms of what uh are going to be your key policies uh and in particular this issue around fiscal sp spending as well um from um you know breaking that um that budget rule that that Germany has as well. So uh Still a fair bit of uncertainty un unlikely to be resolved very quickly as well, so we have to watch and and see how it plays out.
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Chapters
8 chapters
1
Why did the US Services PMI fall into contraction and what does it signal for the economy?
0:01–1:53
2
How are German election results reshaping coalition talks and European stability?
1:53–4:14
3
What is driving the surge in US consumer inflation expectations and egg prices?
4:14–6:37
4
Why might President Trump accelerate tariff policies amid market volatility?
6:37–8:59
5
How are European defence spending and the Ukraine war influencing German government formation?
8:59–11:10
6
What do the latest French and UK PMI data reveal about global services and manufacturing trends?
11:10–13:31
7
How could upcoming Canadian, New Zealand retail data and US CPI shape central‑bank decisions?
13:31–15:36
8
What are the key take‑aways from today’s market outlook and what to watch next week?
15:36–17:14