Friday’s stagflation fears
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What are the key market moves and bond yield changes reported on Friday?
It's Liberation Day this week. Just what does Donald Trump have in store for the world? Plus those autotafts kick in as well, middle of the week. There are reports saying that he doesn't care about the immediate consequences. It's the price you pay for fundamental change, he says. But data is showing consumers are getting more canny with their money in the United States. The economy is slowing and inflation is starting to rise again. Is it all unraveling? It's Monday, it's the thirty first of March. twenty five, it's the morning call from Nab. Good morning. So big moves down in bond yields on Friday. Ten year treasuries uh marginally down over the week, but down eleven basis points on Friday to four point two five percent.
Five year yields also down almost as much, down nine and a half bas uh basis points for Aussie ten year futures, down eight in Canada, ten year guilt's down nine basis points in the UK, German Bund's down almost five. It was a bad day as well on Friday for equities. Uh well Actually, a bad week. So the Nasdaq lost two point seven percent on Friday, two point six percent down over the week. The S P lost two percent on Friday, one point seven percent off the Dow, one percent lower for the DAX. The AS X two hundred was one of the few share markets that actually grew on Friday. It was up naught point two percent, but also one of the first to close.
How do Ray Attrill and the hosts define the current stagflation risk in the US?
And uh on the ASX two hundred futures, that's down one percent today, and the US dollar down a quarter percent on Friday. Just over a hundred and four on the DXY now, which is where it's been hanging around for pretty much most of March. The big winner on Friday was the Japanese yen up 0.8%, the Aussie down 0.3%, below sixty two point nine US cents now, close to sixty two point eight at one stage. So Ray Attrill is with me today. Now look, Gray, I know that Sally said using the word stagflation was a bit over the top because you can't have We have stagflation with with s with such strong job numbers. But we do have beyond that, we do have the two main ingredients, don't we? We've got slow growth and we've got inflation in the United States.
Well at least from the numbers we saw on Friday.
Yes, we did. Good morning, Phil. Yeah, stagflation may be too uh too strong. I think that uh I'm sort of describing it as a a stagflationary whiff around the uh the combination of numbers that we had and and you know the reference there really is to those personal income spending and those PCE deflator numbers, which, you know, in combo, um, you know, do paint a pretty dispiriting story. And I think it's the reason that the equity market was pretty much uh you know, lower from the get go on on Friday and then continue to weaken through the day. And um the highlights or perhaps you'd say the lowlights of those numbers were, you know, real personal spending in uh February up just naught point one percent, with actually two tenths worth of downward revisions to the prior month's numbers, you know, which certainly suggests that the consumer, you know, is really is starting to wilt or certainly um, you know
not going to be spending with nearly the alacrity in the first quarter of this year that they were in the second half of last year. And then you combine that with that core PCE data. I've been um I've been gifted a podcast fill where the second decimal place is of some importance. So 0.37 on the core PCE deflator. Now to be fair, economists pretty evenly split between a point three and a point four to one decimal place. Um but at that uh point three seven, which rounded to point four, does mean that the year on year rate of um that core deflator has edged up to two point eight percent from two point six.
Why are US consumer spending trends weakening while incomes stay steady?
Actually, the prior month was revised to two point seven and um and the message there actually w was not lost on uh Mary Daly. The San Francisco Fed President. So that she said that the inflation data published earlier in the day confirms her decreased confidence in her baseline expectation that two interest rate cuts this year are a reasonable projection.
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Chapters
8 chapters
1
What are the key market moves and bond yield changes reported on Friday?
0:01–1:14
2
How do Ray Attrill and the hosts define the current stagflation risk in the US?
1:14–3:24
3
Why are US consumer spending trends weakening while incomes stay steady?
3:24–5:37
4
What is the impact of recent US tariff announcements on inflation expectations?
5:37–7:17
5
How are European CPI releases expected to influence market expectations for rate cuts?
7:17–8:52
6
What data releases this week could shift the RBA’s stance on interest rates?
8:52–10:53
7
Why are Fed officials hesitant to signal rate cuts despite slowing growth?
10:53–13:07
8
What are the upcoming political and economic uncertainties surrounding Liberation Day?
13:07–14:16