More central bank decisions, more US optimism
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Why did the Bank of England pause rate cuts but slow its quantitative tightening?
So the Bank of England didn't cut rates yesterday, but it has slowed its QT. We'll look at what next from them. Plus, those Aussie job numbers. So long as the unemployment rate is steady, are they any real cause for concern? And other central banks, the Norge Bank cut, at least someone else has done it this week, because the Bank of Japan probably won't later on. It's Friday, it's the 19th of September 2025. This is the morning call from NAB. Good morning. Well, one day on from the confusion of that Fed meeting yesterday, and US stocks have really bounced back. So the Nasdaq is up naught point nine percent, half percent added to the SP five hundred, the Dow up naught point three percent. That's not a great deal, but look at this.
The Russell two thousand is up two point three percent. Elsewhere, we saw a one point six percent rise in the Euros stocks fifty overnight. The DAX is up one point four percent higher at close, p uh but just naught point two percent for the Footy 100. And bond yields are high, particularly in Europe. So we've got a two-basis point rise in 10-year treasuries in the US, but a five-basis point lift in German bunds and UK 10-year guilt yields. Uh up six basis points in France and Italy and Spain. Aussie 10 years. We're at 4.19% yesterday. Today on futures, eight basis points up on that. And the US dollar is a bit higher today. It's up half a percent on the DXY. Meanwhile, a quarter percent fall in the euro. The pound is down half a percent.
So is the Aussie dollar, just below 66.2 US cents now. We've also seen a 0.6% fall in the yen. An oil lower again, down 0.6% for WTI and Brent. Brent around 67.50. A barrel now. And here's Nab's Gavin Friend in London joining us today. And how US markets turned. I mean, first of all, all that caution directly after the Fed, then markets rallied.
How did US equity markets react to the Fed’s more hawkish tone and the Philly Fed manufacturing index?
And look, it's just carried on. So the NASDAQ hitting another record high, the SP not far from it. But the uh the Russell 2000 is uh skyrocketing high, isn't it? And you know, also hit close to hitting a high. So it's not just defensive stuff. stocks. It this is fairly widespread. So, you know, if the question was, will we take cuts or will we try and reduce the risk of inflation? It's it's very clear what the market wants. We'll we'll take the cats, thank you.
Mm-hmm. Morning Phil. Yeah, it does seem that way. Um, you know, the message from the Fed uh of uh adding in that extra i interest rate cut, despite what we saw in the dot plot where, you know, um you've got uh higher inflation and low and uh lower unemployment. Um, you know, and in a very divided dot plot. Um we you know, as we as as discussed yesterday, uh the The press conference was a much more hawkish affair, but uh the market is leaning into those cuts. Um and um, you know, you might look back at the GDP forecasts. I mean, that's a that's a sign of strength coming back. I mean, certainly the narrative around the US over the last few weeks has changed for the better if if if one looks at uh you know, things like GDP now.
Um uh you know it's it's It's l it's all looking uh it's all looking a little bit better. Um, you know, and uh we uh we obviously need to see that play out because at the end of the day, even an improvement to, you know, one point six, one point seven, one point eight percent is not that far away from some of what the other economies are doing. But um certainly, you know, to my to my point, the narrative over the US is looking a little bit better and uh You know, we've seen this story with corporate America. It just uh doesn't really need any um invitation, does it?
No, but the the fact is it's it's the that optimism it seems to be more widespread today. So we'll see how you know how that tracks. But the uh the Bank of England yesterday, interest rates kept at four percent. Um why not a cut? Well, uh they're obviously worried about inflation, aren't they?
They are. I mean, to be fair, nobody expected anything.
What is driving the recent rise in bond yields across the US, Europe and Australia?
You know, the Bank of England's been pretty clear in terms of its set of pattern of moving really at uh the meetings when it has new forecasts, which as we all know are February, May, August and November.
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Chapters
8 chapters
1
Why did the Bank of England pause rate cuts but slow its quantitative tightening?
0:01–1:43
2
How did US equity markets react to the Fed’s more hawkish tone and the Philly Fed manufacturing index?
1:43–3:43
3
What is driving the recent rise in bond yields across the US, Europe and Australia?
3:43–6:35
4
Why is the Bank of England keeping rates at 4% and what are the expectations for its next meeting?
6:35–9:24
5
What does the Norges Bank’s rate cut signal for the Nordic monetary outlook?
9:24–12:22
6
How did New Zealand’s weaker‑than‑expected GDP affect the Kiwi dollar?
12:22–15:06
7
What does the sharp rise in the Philly Fed manufacturing index tell us about US economic momentum?
15:06–17:31
8
How might the upcoming UK budget and new AI investment influence the British economy?
17:31–19:03