Canada cuts. ECB sends mixed messages.
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Why is the US dollar rising while equities are falling today?
Well, it's another day with a rising US dollar, yields climbing a little, and falling equities. I'm gonna ask the question again, why is this happening? Meanwhile, not much reaction to the Bank of Canada cutting rates by 50 basis points because that was what was expected. And PMIs today not expected to change much either. Plus the weekly jobless claims as well. And Tesla today, their earnings results will have those for you as well. It's Thursday, it's the 24th of October, 2024. It's the morning call from Nab. Good morning. Well, the US dollar is higher again, adding another naught point three percent today. That's four percent since the tail end of September, and it's the highest it's been since May. The Aussie uh which rose uh even more against the rising dollar a day back.
Well, it's down today, down three quarters of one percent, back to sixty six point three US cents. The pound is down naught point four percent, the euro is down naught point three percent, and the stock market well still not happy, Jan. The NASDAQ Closed down one point six percent, six nort point nine percent off the S P and one percent down for the Dow at close, the Russell two thousand down 0.8%. Smaller falls, but falls nonetheless in Europe, 0.6% off the cat current, the same for the uh FTSE one hundred and a quarter percent off the Dax. But the Hang Seng was very happy. It was up one point three percent yesterday, and bond yield still edging up, another three basis points up for ten year trade.
Treasury is up three in the UK as well, but down slightly in Europe.
What does the Bank of Canada’s 50‑bp rate cut mean for the market?
Aussie 10 years up three basis points yesterday to four point four six percent, but just one basis point higher on futures right now. And oil down today, one point one percent off WTI and Brent dipped below 75 a bow for a short while. Uh it is uh back above that now, but still one point two percent down, and gold is down one percent today as well. So Ken Cross. Compton is here from NAB in Sydney for his take of of what's going on. So maybe we should start by looking at Canada. We have a naught point two percent fall in the Canadian dollar. Canadian bond yields actually up two basis points for ten years, but that is less than the rise we're seeing in US Treasuries. So not a big market reaction, it's fair to say, to a fifty basis point cut, but we knew it was coming.
But even so it is still the biggest cut from the Bank of Canada since
Yeah. Yeah, good morning, Phil. That fifty basis point cut, as you said, was pretty much and was pretty much priced in and the commentary from the BOC afterward in in the statement of the press conference hasn't really done much to to add too much movement to markets. I mean looking at it though, I think the interesting thing there in terms of their reasoning behind the fifty that differentiates them a little bit from maybe some other markets out there is that there is a a an explicit need there. They want to see rates lower to enable the economy to absorb excess capacity. So, you know, you compare that to Australia, for example, where the RBA is still quite concerned about the output gap being the other way around.
Canada sees themselves as on the other other side of that, and I guess that they view that as one of the fruits of the very tight policy they they they they ran at at at the peak compared to here. Uh but in terms of the the outlook, you know, the BAC trying to remain pretty stridently data dependent.
How is the ECB’s cautious stance affecting expectations for a rate cut?
They're saying that inflation is going to remain around the target level, uh with forces balanced up or down, you know, around that two percent number over time and sort of looking for a few things in the in the mix there to change. I think there is a there is an explicit desire there to s to support growth, which is something that is not quite as um strident a policy factor as in other markets. So so so
they're doing it because they they're doing it because they can, in other words, rather than they have to.
Yeah, there's so there's certainly room in their inflation outlook for it and the market is pretty well um pretty well picking them to continue with it.
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Chapters
8 chapters
1
Why is the US dollar rising while equities are falling today?
0:01–1:24
2
What does the Bank of Canada’s 50‑bp rate cut mean for the market?
1:24–3:05
3
How is the ECB’s cautious stance affecting expectations for a rate cut?
3:05–4:46
4
Why are US Treasury yields climbing and what does it mean for stocks?
4:46–6:35
5
Which earnings reports are driving weak sentiment in the share market?
6:35–8:10
6
What can we expect from today’s global PMI releases?
8:10–9:38
7
How are US jobless claims and labor market data influencing the outlook?
9:38–11:01
8
Did Tesla’s latest results beat expectations and why does it matter?
11:01–12:33