Fed and others less prepared to commit
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What did the Fed, Riksbank and Bank of Canada announce and why is forward guidance missing?
The Fed, the Bank of Canada, the Rix Bank, the ECB about to make up their mind as well. Plus all those corporate earnings, Microsoft, Meta, Tesla, Apple tomorrow. Have they got answers about why their AI investment is so much more than Deep Seek? It's Thursday, it's the 30th of January 2025. It's the Morning Call from NAB. Good morning. Good morning. Well, lots of colour and movement in the markets today. The dollar has been up and down. It's been up 0.2% since the Fed announcement this morning. Actually, it was up 0.5% earlier, but it's come back down from that. The Aussie is down 0.4% to below 62.3 US cents. The Swiss franc is down 0.3%. The euro down 0.2%. Bond yields moved up. Ten-year treasuries were up two basis points before the Fed.
up five after the Fed because of the lack of commitment in their statement to their inflationary path. But now after the press conference, that's all gone. Not up at all. Same as yesterday. German bunds are up just two basis points. Aussie 10 years. We're down five basis points yesterday. to 4.37%, I should say. They are five basis points higher than that on futures this morning. And equities sliding back down again. At one stage, the Nasdaq was down 1%, but that moderated towards the close, finishing down 0.5%, the S&P down 0.4%. 0.3% lower for the Dow, but a different story in Europe where the DAX is up 1% at their close, 0.3% up for the FTSE 100. Oil is lower, 1.2% off WTI today, 0.9% off Brent, which is around 76.80 now.
Again, the story was worse an hour or two ago.
How did the Fed’s rate decision affect the US dollar, bond yields and equity markets today?
So a bit going on today. Let's get across it with J.B. Weir. Sally Aldy joins me today. So there's been a bit of jockeying for position late in the session in the U.S. because, well, first of all, the Fed. Secondly, earnings. Thirdly, not much else going on. Certainly not much in the way of data to talk about, except, of course, we can talk about Australian CPI yesterday, of course.
Yeah, not that much, really. So we had the December trade balance, which actually wasn't a great number in the sense that imports were up about 4%, exports were down about 4.5%. So that trade deficit widening quite materially.
It's the biggest ever, I think, actually.
Yeah.
over the course of the month. And then on top of that, we had some data on inventories and they were up in the fourth quarter. And so the combination of those two things, wider trade deficit and the inventories number, has forced just ahead of tomorrow's advance fourth quarter GDP report in the US, some forecasters just to take a little bit of a red pen to that number and say, well, maybe it feels like the number's going to be sort of closer to two than three. Yeah. off the back of those data. But I think, broadly speaking, I don't think we should say that as a reflection of people getting bearish on the US growth story. From what we've observed so far this year, the economy seems to be ticking along pretty nicely over there.
But yes, really just sort
of. And again, could some of it be a sort of, because obviously this is before Trump. I mean, you know, the idea of a widening trade gap you'd think would put fire into his belly and he would be tariffing like crazy. But I wonder whether some of this is, you know, because this is the last guy, of course, you know, it's nothing to do with Trump. But I wonder whether it is a bit to do with Trump in that, for example, you talk about inferences being higher. And imports being high. I mean, are people trying to get goods in before they get hit with tariffs? Could this just be a bit of an aberration in the
data? So if you break it down, there was a 19% increase in the month in a group of imports called industrial supplies and materials.
What does the widening Australian trade deficit and inventory data mean for the economy?
So the data doesn't really give you much more information than that. So... Maybe, I guess, but given that it seemed to be in a reasonably, you know, it's not like that was reflecting sort of pre-orders of consumer durables like washing machines or whatever else.
So
maybe, but a little bit difficult to tell given the lack of detail we have
in that. Certainly a number that Donald Trump won't like to see, but I'm sure he can fix it.
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Chapters
8 chapters
1
What did the Fed, Riksbank and Bank of Canada announce and why is forward guidance missing?
0:01–1:38
2
How did the Fed’s rate decision affect the US dollar, bond yields and equity markets today?
1:38–3:40
3
What does the widening Australian trade deficit and inventory data mean for the economy?
3:40–6:47
4
How are Australian CPI and inflation expectations shaping expectations for an RBA rate cut?
6:47–9:23
5
What are the key factors influencing the RBA’s timing and size of future rate cuts?
9:23–11:43
6
Why are the ECB, Bank of Canada and Riksbank cutting rates and what uncertainty are they facing?
11:43–14:32
7
How did the latest earnings from Microsoft, Tesla and Meta impact market sentiment?
14:32–14:46
8
What are the main take‑aways from today’s morning call and what to watch tomorrow?
14:46–14:47