Powell talks jobs down, drives equities up
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Why is the US government shutdown entering its 14th day and what are the implications?
It's day 14 of the US shutdown as both sides dig in. And are we being too optimistic about US-China relations as well? Both sides seem to be digging in there as well. And Jerome Powell helping equities recover a little with a more dovish-than-expected talk at the National Association of Business Economists in Philadelphia this morning. His last talk before the next Fed meeting. It's Wednesdays, the 15th of October, 2025. It's the morning call from NAB. Good morning. Well, US equities are up this morning. Well, the Nasdaq is the exception to that. It's down naught point two percent, but stocks generally were all down early in the session, but pecked up a little bit. The US dollar has lost not point two percent on the DXY, but it's been a topsy turvy session.
The Aussie dollar is down more than naught point four percent, below sixty four point nine US cents now. Bond yields falling a lot in Europe, down seven basis points for the UK for ten years, down seven in France as well. Aussie ten years. were at 4.23% yesterday. This morning at 4.26%. And oil is down 1.3% off Brent. The uh IEEA forecast that the oversupply for next year might be as much as four million barrels a day. And spot gold is up 1% at 4,150. And here comes Nab's Gavin Friend joining us from London. And equities have been on a bit of a ride this morning in the US, haven't they? So the S P is naught point three percent higher, but it was down almost one and a half percent earlier. So what's been driving it up?
Well it seems Jerome Powell might have a bit to do with that.
Yeah, morning, Phil. I think so. I mean, it's been a bit of a topsy turvy day, to be honest. Um, you know, I think the overhang of the the China US spat on rare earths and trade generally is uh continuing to reverberate because we don't quite know how that's going to play out.
How did Jerome Powell’s dovish remarks affect US equity markets this morning?
We might think we do, but uh yeah, in terms of the taco trade, but actually uh we don't really know and we can discuss that. But I think to your point, uh when when when when Chair Powell uh who we Was speaking at the National Association of Business Economists um gig in Washington alongside the uh the ongoing IMF World Bank meetings this week. You know, he he um he basically didn't give any reason to uh to not expect the two cuts to the price at the end of this month and again in December. Um, you know, basically you said the outlook hasn't really changed much since the uh the September seventeenth meeting. No surprise, we haven't had much data, right? Uh but the the labor market you know perceptions remain on a downward trajectory.
Payroll the payroll gains have slowed sharply, repeating, you know, this comes from both uh sort of lower immigration and lower labor force uh participation, so supply and demand. Um he noted that the uh he was talking a little bit about the um the employment uh break-even monthly number, which you know, he didn't want to put a number around. But he said, look, the the standard uh standard errors of a a plus or minus fifty thousand and that might suggest that the downside might be below zero. Um Others have suggested it's around that, or it's around thirty or forty thousand a month or what have you. And he really, I guess, just reiterated that this sort of in in a less dynamic, softer labor market environment, the downside risks to employment appear to have risen.
And thereby, you know, as we know, they've shifted the Fed Fed's assessment on the balance of risks. He he he did he did note that prior to the shutdown, data on growth uh had uh had firmed. You know. There was a firmer trajectory, again, you know, referencing that Utwood revision that we saw in the third reading of the Q2 GDP. Um, but uh no pushback on, as I say, on the uh on the on the pricing of of of of rates. Um uh Michelle Bowman also speaking, she didn't say a lot really. She's talking about uh she's talking about uh stress tests, but she said she continues to see two cuts this year, and uh, you know, there's something of a soft. happening in consumer spending. I'm not sure where we're getting that from because we haven't had retail sales, isn't we're not going to either.
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Chapters
8 chapters
1
Why is the US government shutdown entering its 14th day and what are the implications?
0:01–1:43
2
How did Jerome Powell’s dovish remarks affect US equity markets this morning?
1:43–4:28
3
What are the latest movements in the US dollar, Aussie dollar and global bond yields?
4:28–7:44
4
Why are US‑China rare‑earth and trade tensions still reverberating and how might they impact markets?
7:44–10:09
5
How is the US shutdown influencing fiscal policy, payroll funding and federal spending?
10:09–12:35
6
What are the key economic developments in Europe – French politics and German bond spreads?
12:35–14:54
7
Why are UK wage growth and inflation trends raising concerns for the Bank of England?
14:54–16:55
8
What does the latest NAB business confidence survey reveal about the Australian economy?
16:55–17:18