Banking on a cut, a hike and a hold.
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What are the key market moves expected today (BoE, ECB, BOJ, US CPI)?
It's the Bank of England and ECB later on after a bigger than expected fall in UK CPI and more disappointing data from Germany as well. And the Bank of Japan tomorrow, with a rise in exports there, presumably helping make the case for a rate hike, plus US inflation data today for November. Will it finally give us a clear picture of what's going on? It's a big day ahead. And I haven't even started Christmas shopping yet. It's Thursday. It's the eighteenth of december twenty twenty five. It's the morning call from Nab. Good morning. Well further falls in US equities, another one point one percent off the Nasdaq, not point seven percent lower for the S P. So the Nasdaq down almost three point six percent since its most recent high on December the tenth.
But to give it some perspective, it's just a half percent off its all time high as well. Uh in Europe the DAX is down half percent, the FTSE one hundred is up naught point nine percent. The US dollar has turned around slightly, it's up naught point two percent on the DXY, but the Aussie has fallen further, it's down Another 0.4% down to 66.1 US cents. The yen is down 0.6%. Relatively small moves in bond markets though. Oil has uh turned a bit higher and silver is back in uh up 5.7% today, so hitting another new high. And here's NABS Ray Atral for the last time in 2025. Not sure where we start, maybe 'cause it's uh they're just about the only currency which has moved has been the pound. And that I guess comes out of those uh CPI numbers out of the UK overnight, which were lower than expected.
Actually naught point two percent deflation uh in their core CPI number for November.
Yeah, well good morning, Phil.
How did the UK’s unexpected deflation impact the pound and BOE rate‑cut expectations?
And um yes, I mean that probably is the the main story overnight, just in in terms of overall market moves. So stocks are down, so we are seeing a little bit of a a renewed sell off in AI stocks and some signs perhaps of a little bit of rotation, but as you say, not much movement across other markets. But in currencies, yes, sterling is uh is one of the uh one of the movers. There'd be a generally stronger dollar, so we've also got dollar yen higher heading into to the BOJ tomorrow and Aussie I suspect is lower because we do see, you know, it's a bit of a risk off day. So the VIX excuse me, for example, you know, has gone from below sixteen to above seventeen. So that probably accounts for a little bit of Aussie underperformance.
But uh yes, the UK uh CPI data I think really does certainly the market's mind and we don't disagree with that has sealed the deal for a BOE rate cut later today. Yes.
Um The headline did a month on month fall, as you say, naught point two percent down. And what that's meant is that um you know core CPR has fallen from three point four to three point two percent. It was expected to be unchanged. The headline numbers down actually to f from three point six all the way to three point two percent, and services inflation um you know has edged lower again down to four point four from four point five percent. percent. So um I think that, you know, the market wasn't in any real doubt that we were going to get a rate cut today. Um Gavin was actually speculating as to whether, you know, whether those numbers mean that uh one of the NPC members, either Taylor or or Dingra, could even putting the hand up for a fifty basis point cut.
So there's some possibility of a of a three way split, which if you remember we had back in August where um Yeah. Votes for no change for minus twenty five and also for minus fifty. And then they had that second round vote which secured the uh the minus twenty five by a five four majority. But uh I suspect this is gonna be more of a you know perhaps a sort of a seven two um four um for a twenty five point cut with a couple still holding out for for wanting more data before they're happy with further easing. But um but let's see. It'd be interesting to see whether we did see you know another three.
What does Germany’s latest CPI and IFO sentiment tell us about the Eurozone outlook?
But certainly uh you know, a cut there is is very much on the cards and you know our sense is you know, the market's still saying well one or two more next year, our inclination is that um if we do come down to three point seven five today, then you know, another fifty basis points or so next year would be our current uh best guess for twenty twenty six.
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Chapters
8 chapters
1
What are the key market moves expected today (BoE, ECB, BOJ, US CPI)?
0:01–1:38
2
How did the UK’s unexpected deflation impact the pound and BOE rate‑cut expectations?
1:38–3:43
3
What does Germany’s latest CPI and IFO sentiment tell us about the Eurozone outlook?
3:43–5:38
4
Why are US equities, especially AI stocks, under pressure and what does this mean for investors?
5:38–7:11
5
What are Christopher Waller’s views on Fed policy and why might the Fed consider cuts next year?
7:11–9:09
6
How are oil prices reacting to Trump’s tanker threats and what could happen next?
9:09–11:35
7
What signs of recovery are emerging in New Zealand’s confidence and GDP forecasts?
11:35–13:40
8
What are the final takeaways and what’s coming up in the next episode?
13:40–14:35