Markets cautious in data drought
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Why are markets more cautious during the US shutdown and data drought?
The US shutdown continues, the data drought continues, so markets are a little more cautious, and central bankers seem to be erring on the side of caution as well. Well, RBNZ obviously being the exception to that. Today we'll look at what's been said by Fed speakers and a couple of interesting papers as well from the Boston and Dallas Fed. Plus, Japan now under new management. How are markets responding to that? And Michelle Bullock talking to the Senate Economics Committee today as well. It's Friday. Tenth of October twenty twenty five, it's the morning call from Nab. Good morning. Well, another move up for the US dollar today. It's up half a percent, ninety-nine point four on the DXY now. The Aussie is down half a percent at sixty-five point five US cents, and US equities are down half a percent off the Nasdaq and the S P falls in Europe as well.
Bond yields are higher, three basis points added to ten year treasuries. Aussie ten years up five basis points overnight to four point three nine percent on futures this morning, and oil is down one point seven percent. Lower for Brent, just above 6510 a barrel now, and gold has fallen 2.1% lower today and back below that $4,000 mark for now. Uh, but silver has shot up instead. And uh it's NAB Sky Masters joining me today in Sydney. So a lot of the talk about these moves, particularly in US equities, I mean we've heard a lot of this this week about whether the US stock market is overheated, whether there's an AI bubble. And you know, this this argument that maybe it's all a bit circular. So earlier when we we had OpenAI and AMD doing the deal, which pushed OpenAI's share price higher simply because they own more of AMD.
So valuations rising as ownerships shift a a little bit. And that seems to be happening a a great deal. So I think the markets are are looking, aren't they, and going, Well, we don't have any data, we don't know what's going on with it with with
How are Fed speakers like Powell, Williams and Barr influencing expectations despite limited data?
AI and uh so they just step back. But you know, it might just be for a day, of course.
Yeah, look, I think um i it it's it's it's a bit of consolidation. I'd I'd look at it as a bit of consolidation. I mean, yes, equity markets are lower overnight, but they're not dramatically dramatically lower. Um, you know, as you've been talking about earlier on in the week, uh, you know, there have been some um cautious comments out there over, you know, over exuberance in the in the AI sector. Um and, you know, in in a backdrop where you're really lacking any key data releases, particularly out of the US given the shutdown. Um, you know, you are I think you are just seeing a bit of sort of an easing off in in markets as investors sort of try to digest digest what's going on. So you you you've You've seen equity markets come off a little bit overnight.
You've seen, you know, that drift, um, ever so slow drift higher in in bond yields, um, can continue overnight. Um, I guess, you know, standout move, you know, you've got a stronger, stronger US dollar overnight. Um, and as you said, you know, the gold price is is is weaker.
Well, uh so we haven't got data, but we we can't stop the Fed speakers from talking. Uh so uh Jerome Powell yesterday talking at a banking conference in Washington didn't really say a great deal, did he, except for the fact that they will not automatically cut rates based on market expectations. But more interesting stuff overnight. So John Williams from from the New York Fed basically saying, Well, a lack of official data isn't going to stop us taking action if we need to.
Yeah, so um as you said, a couple of couple of s uh Fed speakers overnight, um, the ones that sort of seem to have got more of the headlines are are Williams and Barr. Now, you know, as you said, yeah, Williams did note that, you know, yeah, th the the government that the lack of data because of the shutdown, yeah, isn't gonna deter him from wanting to take action at at upcoming Fed meetings. Um and that you know, he's focusing on the slowdown that you've seen in in the jobs um in in jobs growth um and sort of the also evidence that companies are becoming a bit more hesitant in terms of their hiring.
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Chapters
8 chapters
1
Why are markets more cautious during the US shutdown and data drought?
0:01–1:48
2
How are Fed speakers like Powell, Williams and Barr influencing expectations despite limited data?
1:48–4:01
3
What do the Dallas Fed and Boston Fed papers say about US labour market and inflation expectations?
4:01–6:31
4
Why is the Japanese yen weakening and how might the new LDP leadership affect markets?
6:31–8:56
5
What does the recent New Zealand bond auction reveal about regional yield dynamics?
8:56–10:42
6
How might Canada’s employment data shape the next Bank of Canada rate decision?
10:42–13:21
7
What insights will Michelle Bullock provide in her Senate Economics Committee testimony?
13:21–15:11
8
What factors are driving gold’s recent surge and could the rally continue?
15:11–17:01