Dancing in the Dark

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NAB Morning Call 16 min 2 speakers 8 chapters transcribed 18 days ago
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How is the US government shutdown affecting market data this week?

Phil Dobbie 0:01
Markets will have to feel their way through the next couple of weeks at least because the US government shutdown means we're all in the dark when it comes to a lot of key government data. So we have to rely on the private stuff like the ADP, which showed a big fall in jobs in the United States. But they fine-tuned their previous report based on government data as well, so we've got a bit of a problem there. And a positive Tankan survey for Japan, no surprise on European inflation, and Aussie trade data. today it's Thursday the second of October twenty twenty five. It's the morning call from Nab. Good morning. Well, US stocks are a little higher today. The NASDAQ's up naught point four percent, the SP up a quarter percent, but bigger moves in Europe, the FTSE and DAX both up one per cent.
Phil Dobbie 0:43
Uh but Pfizer shares, their price uh is up seven and a half percent to a multi-year high because they've agreed to go on a new federal webp website called Trump RX, offering cheaper medicine if it's bought directly from them. Uh Donald Trump hopes that this is the first of many, and uh it it affords them an Exemption to tariffs provided they continue to invest in US production. So every day it seems Donald Trump gives us something new. Not much movement in currencies except the yen, which is up another half percent. The Aussie is stuck around 66.1 US cents. Ten year treasury yields are down four basis points, not much movement in Europe. Aussie ten years rose seven basis points yesterday to four point three six percent, which is where they are this morning.
Phil Dobbie 1:22
And oil is down again another 0.8%. So taking Brent below sixty five fifty, almost down to sixty five at one point actually. And from London, here's Nab's Gavin friend. So the shutdown is on for a while, I suspect. In fact, uh betting on polymarket. Uh we can bet on just about everything. They have a thirty eight percent saying uh October the fifteenth or later is when it finishes. A further twenty nine percent saying October the tenth to the fourteenth. So the majority

What does the ADP jobs report reveal about private‑sector payroll trends?

Gavin Friend 1:52
Yeah, that's right. The prediction markets uh siding as you say. Um I I think I saw uh ten to twenty nine days, forty five percent. Um Judge judging by the comments we've heard from the Democrats and the Republicans on day one, trading barbs basically, you know, which is I guess that's what you expect uh at this stage. No little sign of compromise coming through. The Republicans are saying, you know, just if If the Democrats would just vote through their continuing resolution bill, reopen the government, then they can talk. Democrats, so far, they're digging in, they're saying they will not support a partisan Republican spending bill that they say strips away health care uh rights from the American people.
Gavin Friend 2:33
Listening to Republicans' comments, so we had J D Vance joined uh Caroline Levitt at the uh sort of uh the daily press conference in the White House today. And you know, he was making the case, as as was Levit, of of layoffs for federal workers being imminent. Um White House budget director Russell Vaught is planning to swiftly dismiss federal workers was a Bloomberg story. Um looking through the the extensive media coverage, as you can imagine on this, there's a lot of press speculation, it's just a matter of time. The Democrats fold. R you know the the arithmetic it shows that Republicans have got fifty-two votes. They need sixty. Three Democrats have already voted with Republicans, so we're at fifty-five.
Gavin Friend 3:18
We need five. Or they need five. Um four from the Democrats from Maryland and Virginia. Two states with large numbers of federal employees arguably increases the pressure on the democratic leadership not to see. through mass firings. You know, we'll have to see how this plays out.
Phil Dobbie 3:38
And so all of that, I mean, so yeah, we just have to wait and see, don't we? But meanwhile we are stuck with uh private sector data. So and the ADP jobs reports, which we've always said isn't that reliable, well we got it for September, which showed a thirty two percent decline in private sector payrolls.

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