Economy goes soft as Trump plays hardball
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Is the US economy showing early signs of slowdown from the latest ISM and job data?
So are we starting to see it now? The data showing a US slowdown. We saw it with the rise of unfilled job vacancies yesterday. Today, one of the lowest ADP reports ever, and the services ISM slips into contraction territory. Yet the 50% steel tariffs come into force. No wonder then that the Bank of Canada kept rates on hold, citing uncertainty. And Aussie GDP fell to just 0.2%. In Q1, just as a certain bank predicted. So there. It's Thursday, it's the 5th of June 2025. It's the morning call from Nab. Good morning. And yeah, despite all of that, uh US equities are doing quite well. Well, the DASDAC is it's up naught point four per cent, not point one percent for the S P and the Dow just sliding into the red in the last hour of trade.
Actually, they're all doing a lot better mid session. Uh the Eurostocks fifty closed up half a per cent, the DAX up almost naught point eight percent, half a per cent for the CACCAR on a quarter per cent for the FTSE one hundred. So the US dollar also slid a bit further today, down another half per cent on the DXY. Down to ninety-eight point seven, the Aussie is up 0.6%, just a little shy of 65 US cents. The yen is up three-quarters of 1%, the pound up 0.2%, the euro up 0.3%. But the big move has been in treasury yields, down nine basis points for 10 years, down to 4.37%. Canada saw yields down three basis points as well. But European moves were quite limited. So 10-year guilts were down three basis points.
Basis points and that is really the biggest move in Europe. Aussie ten years uh finished yesterday at four point two five per cent, down five basis points on that now.
Why are oil prices falling and how could that pressure affect global markets?
But oil is also down as well. One percent off WTI, uh one point one percent off Brent, which is now below sixty five US dollars a barrel. In fact, it got down to sixty-four thirty mid session. So weaker yields in the US, more expected from the Fed perhaps. Here's NABS gap. friend in London, so it looks like, you know, a chunk of this is all down to the weaker data. In particular the uh services ISM, which was expected to rise a little from fifty one point six to fifty two, but it actually fell to forty nine point nine. So services are only just mine, but they are contracting for the first time since July. So no wonder we're seeing a bit of a market reaction to that.
Yeah, good morning, Phil. I mean I think, in fairness, it was a combination of factors. You're you're right about the the ISM, but we've had a a clutch of softer data. Um we've had a you know, the the manufacturing number on Monday was was softer. That's actually contracting at forty eight and a half, you know, whereas you know forty nine point nine is neither here nor there in terms of the fifty boom bust area, but it's the direction of travel. Um we also had a Soft beige book, you know, that's that's you know, that's that's well regarded, um, you know, by the FOMC. It's very broad. And then we had Trump criticising Powell again, um, this time immediately after a soft ADP private payroll number released at just thirty seven thousand private jobs for the month of May, suitably below a consensus hundred and fourteen, yeah.
Yeah, people don't necessarily put much credence to that, but if you do, that is the smallest since the pandemic. So uh if you if you know if you trust it, that's a number to be worried about.
Yeah, I I think you're right. I mean the you know the the the track record of of ADP is lousy, um you know, and uh that the the market knows that, but I think that's the point, isn't it? When you get a day to your opening lines there about, you know, nine or ten basis points off of uh of of two and ten year yields in the US, but not in but not in Europe. Um, you know, at a point when markets have been very Focused on higher yields, higher term premium debts and deficits.
What does the Beige Book reveal about US economic uncertainty and inflation risks?
Um there's there's almost a kind of a you know a reality check today to um sort of uh you know a wave of softer numbers coming in on the ISMs, both manufacturing and services, as I say, the beige book, we can add into that last week's um rise to to the high since twenty twenty.
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Chapters
8 chapters
1
Is the US economy showing early signs of slowdown from the latest ISM and job data?
0:01–1:35
2
Why are oil prices falling and how could that pressure affect global markets?
1:35–3:43
3
What does the Beige Book reveal about US economic uncertainty and inflation risks?
3:43–6:11
4
How are European interest‑rate moves and trade tensions influencing the housing market?
6:11–8:34
5
Could new steel tariffs and Beige Book insights push the Fed toward policy changes?
8:34–10:52
6
What drove Australia’s modest Q1 GDP growth and what does it mean for the RBA?
10:52–13:25
7
What are the ECB’s latest inflation forecasts and prospects for rate cuts?
13:25–15:19
8
Which US labor‑market figures should investors watch before the payroll report?
15:19–16:35