Have markets stopped believing?
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Why didn't markets react to the threat of new tariffs on GST‑charged US imports?
Well you might have thought that issuing retaliatory tariffs against any country that has a value added tax might have scared markets a little bit on Friday, but it didn't. So is that because people have stopped believing the US President is going to carry out any of the threats he's making? How much longer? As well, will the weakening US dollar go on for it is quite a reversal from his early day of his days in office, you know, last month. And the RBA tomorrow, they're gonna cut rates, are they? Well It's not as certain as markets are indicating. It's Monday, it's the seventeenth of february twenty twenty five. It's the morning call from Nab. Good morning. Well, it was another day of weakness for the US dollar on Friday, falling almost naught point six percent and one a quarter percent down over the week.
The gains have been in the Swedish krona. That was up two point three percent last week, the Euro up one point six percent, the pound up one and a half percent, and over the week the Aussie was up one and a quarter percent as well. Uh mild moves for US equities on Friday. We had a naught point four percent rise in the Nasdaq. That was the best of it. The Dow was down point. point four percent. The SP and the Russell two thousand were marginally in the red. In fact, over the week the Russell two thousand didn't grow at all. But we did have a two point six percent rise in the NASDAQ. But the big gainer last week was the Hang Seng up over seven percent, up three point seven percent on Friday alone. And bond yields lower on Friday, as much as five basis points lower for 10 year treasuries.
Aussie 10 year yields down almost as much as that as well. But over the week
What drove the recent moves in bond yields and commodity prices last week?
ten year treasuries were down just two basis points, whereas elsewhere, largely, yields were up, up six basis points for ten year bunds, for example, and almost as much for Aussie ten years, despite the the moves on Friday. And commodities wise last week, well it was okay per uh for copper and gold, although gold was only up naught point seven percent over the entire week. We had big drops in coal and uh small moves down for iron and And oil and it was quite a week, wasn't it, last week? And uh it looks like we're gonna have another one this week, I suspect. Uh Nabray Atril is with me again. So we were taken aback a bit by the idea that President Trump will uh only will include VAT charged on US goods all goods, but you know, including US goods, uh when he seeks to issue tallitary tariffs.
So we talked about that on Friday morning's podcast. Markets didn't I mean, they responded initially, but over the day they didn't really respond to that a lot. Is that because they are at the stage now where they just don't believe these things are gonna happen? Yeah, morning Phil.
Well um yeah, I must admit that I'm a little bit puzzled that uh the market has uh has been so sanguine and obviously there's a little bit of sticker shock around about the time that we were recording on Friday when those headlines about including uh VAT or that VAT regimes were now in the crosshairs alongside, you know, differing tariff regimes, which has clearly, you know, dramatically widened the aperture regarding potential action. The Trump administration might decree under the umbrella of reciprocity. However misguided, the prospect of a 20% additional tariff on EU imports, indeed on imports from every other OECD country, which does practice some kind of GST or VAT scheme, is I think is truly terrifying as far as what that would.
mean for global growth and and with that the likes of the Ossie
Yeah, so is Mark it's just a well it's so crazy we don't believe it. We we we you feel like it's just another
I don't think it's as much that as suggestion that nothing is going to happen before April. So this wasn't uh you know, again, an executive order saying they're coming in tomorrow. Um, you know, there's gonna be a lot of work. Howard Lutnick, the US Commerce Secretary, is gonna be instrumental in in fashioning appropriate policies. But, you know, there's talk that nothing will happen or suggesting nothing will happen before April the first and it could even be, you know, as as late as August before, you know
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Chapters
8 chapters
1
Why didn't markets react to the threat of new tariffs on GST‑charged US imports?
0:01–1:25
2
What drove the recent moves in bond yields and commodity prices last week?
1:25–3:49
3
Are markets discounting the risk of future US‑EU tariff negotiations?
3:49–6:24
4
How might the EU emergency summit on Ukraine affect US‑Russia relations and defence spending?
6:24–8:55
5
Can the push to keep long‑term US Treasury yields low be sustained?
8:55–11:17
6
What is driving the surge in Australian business loan growth and its link to government financing?
11:17–13:27
7
Why is the tech sector leading the market rally and what does buying the dip mean for investors?
13:27–15:14
8
Will the RBA still cut rates tomorrow despite growing doubts and inflation trends?
15:14–17:02