Markets buoyant from Fed hikes. BoE plays it cool.
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Why did US equity markets rally after the Fed’s rate cut?
A day on from the Fed and share markets are rejoicing. So they've bought the argument that the soft landing is coming, and it's only good news from here. Well, in the United States anyway. In the UK, the Bank of England kept rates on hold and is very cautious about where next, but maybe a cut next time, maybe. And we'll look at Australia's employment numbers from yesterday and what that might mean for the RBA. Also, New Zealand's GDP. Bad, but not as bad as it could have been. And what to expect today? Other than the Bank of Japan. Yes, another central bank. The last one for the week, I promise. It's Friday, it's the 20th of September, 2024. It's the morning call from NAB. Good morning. Well, US shares have bounced back in a big fashion.
A two and a half percent lift in the Nasdaq, one point seven percent for the SP hitting another new high and up almost twenty percent year to date, a one point three percent lift today for the Dow and the Russell two thousand is up over two percent as well. The reverberations are being felt in Europe as well, where the Eurostocks fifty is up two point two percent, a bit more for the Cat Carrot, just not point nine percent though for the FTSE one hundred. Not a lot of movement in the US dollar. It's been up and down, but back where it was this time yesterday. But it's been a good session for the Aussie dollar. It's up naught point eight percent. We've got a half percent rise in the pound, a naught point four percent lift for the euro, but a quarter percent fall in the yen.
And bond yields are generally up. Two basis points higher for ten year treasuries, five for UK ten years. Uh Aussie ten years were up seven basis points yesterday up to three point nine two percent. Now on futures up another five basis points to three point nine seven percent. And oil is up as well. One and a half percent for WTI and for Brent.
How are the UK and BoE’s “hold” decision influencing euro‑zone rates?
Brent around seventy four seventy five a barrel now. Gold higher again today, getting up over two thousand six hundred. Not as quite uh as high as the all time high, but very close to it. And Rodrigo Cotrill joins me today. So clearly the confidence from Jerome Powell yesterday today has reverberated around the markets. A a cynic would say, you know, fifty basis points might have been because of downturn fears, but everyone's bought the line that no, all is well and they're doing it because they can. So equity's up, the yield curve steepening. Two ten spreads, now uh fourteen basis points.
Yeah. Uh morning Phil. Um yeah, I think that certainly the the narrative that you know now that the the Fed is not as concerned with inflation, uh can take a closer look at that weakness that is seems to be emerging from the labor market and uh as an insurance policy, they're not they did the fifty basis point cut and and not necessarily panicking that a recession is coming. Um so certainly, you know, you look at the equity market and and And that's been really, really positive. And of course the weakness in the dollar has been a a procyclical weakness, if you like, driven by procyclical pairs like the O T the Kiwi. you know, leading the charge. So that that's certainly good news for everyone because as the dollar goes down and the Fed eases, uh it also eases global financial conditions, um and improves the outlook for the global economy as well.
So all good in that sense. Uh the the one thing that I will note though is that when you look at the steepening of the curve, uh it hasn't been driven by the front end. It's actually the back end of the curve that is lifted a little bit more. And maybe um these concerns around the government shutdown has played its part. Um we had a bill that was rejected and uh even Republicans were blaming the the MAGA Republicans or Trump supporters for um not passing the bill. So maybe as we get closer to the end of the month that the market's gonna start thinking a little bit more about this. Um that said, you know, reading, you know, uh political commentators, there's a general sense, as is always the case That you know eventually they will pass a bill or extend the the you know the uh the the debt.
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Chapters
8 chapters
1
Why did US equity markets rally after the Fed’s rate cut?
0:01–1:36
2
How are the UK and BoE’s “hold” decision influencing euro‑zone rates?
1:36–3:53
3
What do the latest Australian employment numbers reveal about the RBA’s stance?
3:53–6:02
4
Is the New Zealand GDP slowdown signalling a deeper recession?
6:02–8:36
5
What does the Bank of Japan’s policy outlook mean for future rate moves?
8:36–11:27
6
How are global commodity prices reacting to the Fed easing and geopolitical risks?
11:27–14:15
7
What are the expectations for UK retail sales and Canadian data today?
14:15–16:48
8
Will the upcoming US inflation data trigger another round of central‑bank cuts?
16:48–17:35