A week of cuts and uncertainty
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Which central banks are expected to cut rates this week and why?
Several central banks are expected to cut rates this week, and the Fed next week is looking even more likely after Friday's non-farm payrolls. We'll look at those numbers today. Plus, unemployment in Canada prepaying the way for a big cut from the Bank of Canada. And then all that geopolitical uncertainty in France, in Korea, and now in Syria with the toppling of the Assad regime. It's a week of cuts and uncertainty. One bank won't be cutting this week. Though we know which one that is. It's Monday, it's the ninth of December twenty twenty four. It's the morning call from Nab. Good morning. Well, a fall in bond yields last week, particularly on Friday, when three and five year Treasury yields were down four basis points, down two point three basis points for ten year treasuries, which is more than Aussie ten years, which were down one and a half basis points, or ten year buns down just naught point three basis points.
And in fact, over the week yields actually rose for ten year buns up two basis points over the week, and also for ten year guilds up over three basis points. Uh it was another week that saw the US dollar rise, but not by much, just naught point three percent over the week for the DXY, but a big one point nine percent drop in the Australian dollar, one of the worst performers, the New Zealand dollar not far behind that, falling one and a half percent last week. And equities, a great week for the DAX, up three point nine percent, three point three percent for the Nasdaq, less for the S P uh, but still it was up one percent. Not so good for the ASX two hundred, that was down naught point two percent.
On Friday, the big winner was the Hang Seng. That was at 1.6%, with the CSI 300 not far behind it, but the Nasdaq also putting in 0.8% on Friday.
What did the drop in WTI crude oil prices signal for the market this week?
An oil down, WTI down 1.2% last week, more than that on Friday. And Brent lost 2.5%, finishing a little over 71 a barrel. So uh Nab's Taylor Nugent joins me today from Nab in Melbourne. So payrolls, they came and They went. The number itself wasn't a surprise, but uh maybe the increase in the unemployment rate was. Yeah, good morning, Phil. So
payrolls, as you say, pretty much bang on. Um two twenty seven thousand increase in in payrolls in November. Consensus was was for two hundred and twenty thousand. And so essentially what that says is that that soft number that we got in October, um, we got payback from that was driven by, you know, strike affected workers and and hurricane affected workers coming back. Um, but it was hardly, you know, hardly particularly emphatic. And so, you know, if you look over the the November and October month together, you've got payrolls growth averaging about 132K, which is, you know, not not terrible, but but hardly particularly strong. And, you know, doesn't do anything to change those themes that that kind of underlying pace of net hiring does look to have slowed pretty noticeably from earlier in the year.
Um and I think, you know, you saw their inline payrolls number, but but a market reaction that kind of increased Increased comfort that the Fed is gonna cut in December, short end yields down a little bit lower, and I think it's the household survey, and as you say, the unemployment rate that that um has been in focus there.
Is the softer employment data in the U.S. a cause for concern?
It was four point two. The median forecast was for four point one, but it was very much split between four point one and four point two. So only a only a small upside surprise.
So is this a rise in unemployment because we've got more people uh looking for work, so the uh participation rate has increased? Or is that not the case? Is this bad news all round in
Yeah, so the employment in the household survey was um was was softer. So we're seeing we can see in those ratios, which are, you know, a bit more reliable than the the o um outright numbers from from the household survey that employment as a share of a population did tick down again for another month that was at eighty point four percent, and that's actually now its lowest uh since December. Um and we saw the participation rate fall a little bit as well.
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Chapters
8 chapters
1
Which central banks are expected to cut rates this week and why?
0:01–1:34
2
What did the drop in WTI crude oil prices signal for the market this week?
1:34–2:59
3
Is the softer employment data in the U.S. a cause for concern?
2:59–4:27
4
How did Fed speakers respond to the latest payroll numbers before the meeting?
4:27–5:48
5
Is a December rate cut by the Federal Reserve now more likely?
5:48–7:18
6
How are growth‑sensitive currencies reacting to heightened geopolitical risk?
7:18–8:15
7
What rate decision is the Bank of Canada expected to make this week?
8:15–9:54
8
What will China’s CPI and PPI data reveal about domestic demand trends?
9:54–17:14