Central Banks Last Dash

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NAB Morning Call 9 min 2 speakers 7 chapters transcribed 19 days ago
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Why is this week considered a pivotal moment for central banks and global markets?

Phil Dobbie 0:01
Well, it's a pretty big week for central banks and the long awaited up to date non farm payrolls from the United States just after the Fed last week. That timing wasn't perfect, was it? But UK GDP numbers were timed a little better, showing an economy in decline just ahead of the Bank of England this week and the ECB and Bank of Japan as well this week. So get ready for it. It's Monday, it's the fifteenth of December, twenty twenty-five. It's the morning call from NAB. Good morning. Well, a tragic weekend in Sydney, of course, way too close to home for this sort of atrocity. We wouldn't want to see it anywhere else in the world, but obviously on our doorstep. So our thoughts are, of course, with all of those people affected.
Phil Dobbie 0:40
Uh meanwhile, of course, we do what we do, uh and the world moves on, a slight tick up in the uh US dollar on Friday, but it lost one point six percent over the week last week. The Aussie down less than naught point two percent over the week. Week finishing up at 66.5 US cents. US equities finished Friday well down, 1.7% off Nasdaq, 1% off the SP. Bond yields rose on Friday up three basis points for 10 year treasuries, up to 4.18 1.8%, having started the month at 4.09%. So that's a nine basis point rise.

What did the dissenting Fed officials say about keeping rates on hold?

Phil Dobbie 1:11
Whereas Aussie ten years uh finished the week at four point eight two percent, having started the month at four point five six percent. So that's a a twenty five or twenty six basis point rise uh this month. Uh they're up uh two basis points since the close on Friday. Uh and oil a bit higher on Friday, Comic Silver as well fell four percent, losing those gains of the week, but still up four point eight percent so far this month. So quite a bit going on, a busy week ahead. Uh to talk us through it all here's Nab Sally Old. Uh a busy week, but a relatively quiet day for data on Friday. Uh but we did hear from the dissenters at the Fed uh and their reasons for for wanting to keep rates on hold. And uh I mean part of it is waiting for the data, isn't it?
Phil Dobbie 1:54
We we we get payrolls for November and for October tomorrow.
Sally Auld 1:57
Yeah, that's right. Good morning, Phil. And I I think I'd just before we get into the details also just um like to add my Heartfelt love and condolences to all of those who have been affected by, you know, what were really deeply distressing and shocking events uh that unfolded yesterday uh evening in Sydney. Um But uh as you say, you know, we're here to do the podcast.

How does the latest UK GDP data influence the Bank of England’s upcoming decision?

Sally Auld 2:20
So yes, indeed. Uh we did hear from the dissenters. So uh, you know, these were uh Schmidt, who comes from the Kansas district. You know, he basically said, Yeah Yeah, happy to acknowledge that the labor market's cooling, but it's broadly in balance and the problem is that inflation is too high. And so that was largely why he wanted to uh, you know, dissent um from last week's rate cut. And then Austin Goolsby, uh, from Chicago basically said, you know, he thought it was just prudent to wait for more information as he said, you know, we're gonna get more uh this week. Uh and he said in his district of Chicago Uh prices are basically, you know, the main concern. So uh I guess, you know, it's always um you know, once we get the statement and we know, you know, who voted for what, um it's always interesting just to in unpack that a little bit more and understand why.
Sally Auld 3:08
But it does seem to be, you know, just this lingering concern that uh inflation is just too high.
Phil Dobbie 3:13
Uh and Europe, uh very mixed picture. It's now it seems to be divided by the English Channel, doesn't it? So uh UK GDP fell for a month, uh for the for for the month of October by naught point one percent. Construction was well down, services uh was a a chunk of it as well. Uh so I guess that makes it easy, doesn't it, for the Bank of England this week, given that the the economy is starting to slide some so far.

What are the expectations for the European central banks and the ECB this week?

Sally Auld 3:38
Yeah, that that that's exactly right. So as you said, uh that GDP number for October, a bit softer than expected. And look, th these numbers can get revised a fair bit, but it does, I guess, just bring into play that possibility of, you know, a a negative GDP number in the fourth quarter of twenty five, uh over in the UK.

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