Fed Minutes, Gold’s New High and the RBNZ’s big cut
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What are the headline market moves in the US, Europe and Asia this morning?
The Fed minutes are out. We'll look at what prompted the decision to cut last time and we'll delve into that big cut yesterday by the RBNZ. And gold pushes higher still, even with a rising US dollar today, shares higher despite warnings of overheating on tech. And in Germany, more bad news with their factory orders yesterday. And the yen, how low will it go? It's Thursday, it's the 9th of October 2025. It's the morning call from NAB. Good morning. Well, US equity is bouncing back today, the NASDAQ at one point six percent, not point six percent for the S P, big rises in Europe as well, not point nine percent for the DAX, for example, a naught point four percent rise in the US dollar, another big drop in the yen, it's down naught point six percent today, the euro half percent lower, but the Aussie is sticking around sixty five point eight US cents.
Biggest falls in bond yields in Europe, though, down six basis points in France and Italy, down three in Germany. Much movement in the US though, or for Aussie 10 years, which are around 4.35% this morning. And oil is moving back up 1.3% high for Brent, WTI doing the same, even with a sharp rise in inventories in the US overnight, and gold pushing even higher up 1.5%. So spot gold has now moved over the $4,000 barrier as well. So here's NABS Ray Atrill. Uh let's start with what's new and fresh and expensive. Exciting, Ray. The um well new and fresh anyway, the FOMC minutes are just out from the meeting when they did cut rates, even though they are clearly still worried about inflation.
Yep, good morning, Phil. Fresh cab off the rank. So um haven't read all forty pages of them yet, or however many it is, but certainly looking through some of the uh the key headlines there, I think the most interesting headline, which I think you've just alluded to, is that the majority of FOMC members at the September meeting, where just remember they did decide to cut a quarter of a percentage point, emphasized upside risk. risks to the inflation outlook. And only a couple of members, I'm sure we know who one of those is, said inflation would be close to the goal, excluding tariffs. So, you know, even though there was that agreement to cut rates, and of course, you know, the most FMC members said they supported further rate cuts.
But that's obviously self evident by the fact that we obviously had the new dot plot, which showed that a slender majority um of FMC members expecting a further two rate cuts this year. So for me the sort of takeaway is that, you know, the weakness or the evident weakness of the labour market is, you know, is currently in the driving seat. And I think that uh, you know, whether we get official numbers out, um, in the in time for the October meeting or not, um, the conclusion will probably be that we're, you know, we're convinced there's enough labour market weakness to uh um to enact at least another an at least another one cut before Christmas. But I think these concerns about inflation are really playing into the outlook for twenty twenty six and the degree of optimism that markets continue to place on at least another fifty basis points of cuts next year, which obviously is in slight contradiction to the dots just at the moment.
So um
How did the Fed’s September minutes explain the recent rate cut and future upside risks?
Yeah, so I'd see them as sort of uh whether you want to see them as hawkish or not, that might be too strong a term, but we have seen, you know, the two year treasury yield has been edging higher through the US session, um, and it seems to have added another sort of half a basis point to a basis point since those minutes have come out.
Uh of course we had a big cut in New Zealand yesterday. It wasn't a total surprise. We said it was an each way each way bet, but still the uh the Kiwi dollar down naught point four percent. We had a five basis point drop in ten year bonds share market up naught point three percent uh because of that fifty basis point cut yesterday. Uh so it says a lot about the New Zealand economy, doesn't it?
Well, certainly in terms of the R B and Z read of it, I mean as it was we have been saying, I think we've articulated on a couple of podcasts that certainly the view of our BNZ colleagues is that the data that we get for the third quarter should show a significant improvement on the second quarter numbers.
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Chapters
7 chapters
1
What are the headline market moves in the US, Europe and Asia this morning?
0:01–3:03
2
How did the Fed’s September minutes explain the recent rate cut and future upside risks?
3:03–6:08
3
Why is the RBNZ’s big rate cut significant and what does it signal for New Zealand’s economy?
6:08–8:34
4
What do the latest German factory‑order and industrial‑production numbers mean for Europe?
8:34–11:50
5
Why is gold breaking the $4,000 barrier despite a stronger US dollar?
11:50–13:53
6
How low could the yen fall and what could trigger government intervention?
13:53–16:15
7
What are the economic impacts of the US government shutdown on consumer spending?
16:15–16:35