Is ECB rate still restrictive? Aussie employment today’s focus.
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Is the ECB policy rate still restrictive?
Is the ECB interest rate still restricted? Maybe they've gone far enough. That's the view of one ECB member. Uh UK headline inflation ticked up a little more than expected, although not so for the core rate. We'll look at the reaction to that. The RBNZ did cut by 50 basis points, so what now? More tariff talk from Trump. Uh he's doing a good job of upsetting the Europeans right now as well. And Australian labour market data today. What to expect? It's Thursday. Tweth of february twenty twenty five is the morning call from Nab. Good morning. Well the US dollar is ever so slightly higher today, the on the DXY just below one hundred and seven point two. The euro and the pound have both lost naught point two percent, the Aussie just naught point one percent lower at sixty three and a half US cents.
Some decent moves in bond yields in Europe, ten year German bundles are up six basis points, up eight in France, nine in Italy, and five for ten year guilt yields in the UK, where As in the US, well ten years up just two basis points in the end and down one basis point in Canada. Aussie ten years yesterday rose two basis points to four point five two percent. Uh this morning on futures up another five basis points on that. And US stocks, well they weren't moving very much, but they have been helped. They've been pushed along by the Fed minutes out this morning. So the Nasdaq, well that's not moved a great deal. It's just in the group.
Why did UK headline inflation rise above expectations?
In the SP though, it's up a quarter per cent. That's a new record high for the SP. The Dow is up 0.2%. The Russell 2000, though, down 0.3%. Europe had a bad day with the Eurostocks 50 down 1.3%. The DAX lost 1.8%. The FTSE down 0.6%. And oil is higher, 0.6% more for WTI and a 0.4% rise in Brent, which is just over 76 a barrel. Uh Nabs Sky Masters is with me today. We've got lots of Trump, of course, but the move in bonds that we've seen in Europe overnight, well, we can say that was more influenced by Isabel Stable from the ECB, uh who was interviewed by the F T. She said we're getting close to the point where we have to pause or halt our rate cuts, saying she's not entirely sure whether the rate now is still reduced.
Restrictive.
Yes, Phil, you're correct. Um we've seen a bit of movement in um bond yields overnight. Um, you know, you're you're sort of citing the the levels and and that of of markets um and and little movements doesn't really reflect the um trading ranges that we've seen through through the session and Um, you know, um Bund Yields uh led led the sell off early in the overnight session and and as you said, that was on the back of comments from Isabel Schnabel um in an FT article. You know, whereas you said, she, you know, is is pointing to the fact that the ECB may be getting close to the point where we have to pause or halt our rate cut. So in reaction to that, um you have seen some unwinding of rate cut expectations.
Um the ECB is widely expected to cut rates next month, but from there the outlook is coming is becoming a little bit less clear. Um and And the EuroS I OIS curve is pricing a total of seventy two base points of cuts for the year. So that's down from seventy-six basis points. So not not, you know, massive moves, but but you have started to see the market question um the the outlook for rate cuts.
How are European bond yields reacting to ECB comments?
And so that did um see yields, as I said, move higher. Treasuries followed that sell off early in the session. Um but then rallied back on um housing housing data that came out in the US.
Is that because they see the neutral rate is perhaps higher than they thought? Is that what is that what she's saying? Because I mean they're currently what, two two point seven five percent. The E C B saying they think the neutral rate is between one point seven five and two point two five. So that you know to get into that you at least another two um cuts away. But uh are they saying well now is she saying well no actually it might not be. It might be harder than that.
Well she could be. I think she's a a known a known hawk. So, um, you know, she's she's one of one of many.
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Chapters
8 chapters
1
Is the ECB policy rate still restrictive?
0:01–1:16
2
Why did UK headline inflation rise above expectations?
1:16–3:23
3
How are European bond yields reacting to ECB comments?
3:23–4:56
4
What do the latest FOMC minutes suggest about Fed policy?
4:56–6:34
5
What impact could Trump's proposed tariffs have on markets?
6:34–9:13
6
How did US housing‑starts data affect Treasury yields?
9:13–11:09
7
Will Australia's unemployment rate rise above 4 % this month?
11:09–13:01
8
What are the implications of the upcoming German elections for Europe?
13:01–14:56