EU says ‘Back atcha!’ Is Australia exempt?
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Why is the EU promising swift retaliation to Trump’s 25% steel and aluminium tariffs?
So the EU is promising swift retaliation for Donald Trump's twenty five percent tariff on steel and aluminum. Will Australia manage to escape it? There'd be no exceptions so far. Uh is this all slowing down the Fed on its path to cut rates? And why are markets less favourable for the US all of a sudden when Trump's has said these new tariffs will make America very rich? It's Wednesday. It's the twelfth of February, twenty twenty five. It's the morning call from NAB. Good morning. Well, a week a dollar today losing naught point four percent on the DXY. The Aussie is up naught point three per cent. The euro is up naught point six percent, the pound is up almost naught point seven percent. Ten year treasuries are up four basis points to four point five four per cent, but up twelve basis points in France, up seven in Germany, up eight in Italy, up five in the UK.
Uh all those for ten year yields. Aussie ten year yields were down one basis point yester yesterday to four point three nine percent. But on futures this morning, uh they're up about eight basis points, so sort of in line with the uh global push that we're seeing for high yields. And US stocks are mixed, a third of one percent lower for the Nasdaq at the close, not point one percent for the S P. So it's basically flat uh just in the green. The Dow is up 0.3%, the Russell two thousand is down half a percent, whereas in Europe the Eurostocks fifty is up uh naught point six percent, same for the Dow. Tax and oil is higher, one point three percent out for WTI and one point four percent higher for Brent, almost at seventy seven a barrel.
So Ken Compton is with me today. Ken can perhaps explain why tariffs on Cityal now uh seemingly certain that has made the US dollar weaker. Uh so are shares weaker and um Europe who could lose has a stronger currency and a better outcome with shares. I can understand the rhyme. in in bond yields. But it's curious, isn't it, what's happening with equities?
Yeah, good morning, Phil. It's been a bit of a movable feast in markets in terms of the reaction to various different tariff headlines over the course of the past few weeks, hasn't it? I mean I mean ev even in bonds in particular, you know, we had yields falling ahead of just ahead of inauguration because tariffs were going to be easier than we had them um yeah, we had we had them rising after that on the fact that tariffs were gonna come in and then as we got a pause and uh Mexican tariffs yields came down. So it's not clear whether uh
Will Australia be exempt from the new US steel and aluminium tariffs?
Tariffs are yields on or yields off to some extent. Um the the moves in equities overnight just seem to be a a bit of a continued reaction to um just point and counterpoint on the on the aluminum and steel tariffs that were announced earlier in the week. So I don't think there's um too much too much there beyond um you know beyond sort of tit tit for tat um discussions at this point. We've got the Europeans talking about their response and and and a few different things, but not nothing too specific has actually emerged yet.
Well the I mean the F T is arguing that maybe You know, the fact we're seeing a weaker dollar of all of a sudden is, you know, a sign that maybe uh you know, some of these policies are starting to misfire. Because for example, we're seeing emerging currencies who you'd assume would suffer under a trade war, have actually been growing over the last couple of weeks because, you know, they hit lows and so they're a cheap buy, I guess. So it is, as you say, it's a movable feast, isn't it? But the um it's it's curious the response from Europe though. So European equities Yeah. Much higher, even though you would have thought Europe would be one of those countries that would be suffering quite a lot well, it's not a country, is it?
One of those regions that would be suffering quite a lot from uh from these tariffs.
Um look I mean I I'm not an expert over the detail of e of exactly how the the steel sector tariffs are are are gonna have an impact. I mean, yeah, there are there c there can be pros and cons either way in terms of um in in in in terms of the impacts and I mean where we're most l closely looking at the relationships on our on on our research team are of course, you know, relative to Australia.
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Chapters
8 chapters
1
Why is the EU promising swift retaliation to Trump’s 25% steel and aluminium tariffs?
0:01–2:11
2
Will Australia be exempt from the new US steel and aluminium tariffs?
2:11–5:02
3
How are global bond yields reacting to the tariff news and Fed policy?
5:02–7:55
4
What explains the surprising strength of European equities versus US markets?
7:55–10:21
5
How could the tariffs create second‑order impacts for Australia via China?
10:21–13:22
6
What are the latest US CPI numbers and why do they matter for rate cuts?
13:22–16:07
7
How is the Bank of England’s Catherine Mann’s stance influencing rate expectations?
16:07–17:50
8
What do the NAB business survey and Australian home‑loan data reveal about the economy?
17:50–18:12