RBA & Fed Week
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What are the RBA and Fed expectations for policy this week?
It's the RBA and the Fed this week, and we sort of know what's gonna happen with both of them. The Fed will cut, the RBA won't. That's what we're expecting. Both will probably give warnings about inflation as we heard over the weekend. Confidence in Australia could pressure prices. Well, consumer confidence is lifting in the US too. Uh let's look at all of that. It's Monday, it's the eighth of december twenty twenty five. It's the morning call from Nab. Good morning. Well, the US dollar lost uh half percent last week on the DXY. The Aussie was the fastest growing in the G ten. It was up one point four percent last week, up to sixty six point four US cents. US ten year yields rose twelve basis points last week, but not as much as Aussie ten years.
They were up almost twenty basis points, now at four point seven two percent. If you're wondering why that is, have a listen to the uh weekend edition and uh all will be explained. Equities were up a little in the US. On Friday, but not much. Over the week, uh point nine percent for the NASDAQ, uh, but surpassed by a one point three percent lift in China's CSI three hundred. The ASX two hundred was up just a quarter percent last week. Uh there are AI wars going on in the US as well. That's uh affecting share prices a little bit. So open AI seems to uh have lost some confidence with the investors. So Microsoft, which is a significant shareholder, saw their shares. Falling uh by one percent so far this month, whereas the Nasdaq is up one point four percent, so they're heading in an opposite direction.
So uh we got some numbers on Friday, a lot of them very out of date, but here's NABS Ken Compton to look at them anyway.
How are Australian bond yields evolving and why are they rising?
First though, let's look at the uh the yield story. So Aussie tenure yields, I mean they fell away a bit at the end of the week, but they're still up at four point seven percent. I mean, could they go higher? Given where we're thinking the RBA might be going now.
Oh look, anything is possible, Phil, and uh good morning. Uh we did have a little bit of a pullback in yields on Friday, but the th the biggest story there is of course the fact that if you took it out look at our three year yields for example, uh the government bond yield there has gone from three point three to four point zero five since uh s since late October. Um pretty uh pr pretty impressive run up and a and a massive switch around. And I think um you know the view that Sally outlined for us on the weekend of um of of why the the market is suddenly sort of swinging around to um you know to to pricing rate hikes is being is is being reflected in pricing yeah across the market. I mean could they continue higher?
I mean yeah we were a little bit higher than this back in January actually and at that point the RBA was still at still at four point three and only priced to cut once or twice. Look there's there's always a little bit of upside there I suppose. We're starting to think it is getting a little bit stretched. Have we obviously got the RBA tomorrow. Um yeah, we do expect them to to provide a pretty hawkish commentary, but that's obviously pretty much in the price. If you look beyond that as to what we might need to see the odds of a rate hike next year increasing from you know the current hundred and thirty-odd percent up towards sort of a solid two rate hikes. Sorry, yeah, two rate hikes priced. Yeah, you're probably gonna need um a a a bit of bit of further boost from both the both the consumption.
side and the and the labour market side. You know, we do get a read on the labour market this week. NAB is a touch stronger than um th than consensus, looking for the unemployment rate to actually um stick at four three. The market's at four four. But would I expect even realisation of that NAB view to to help, you know, lift yields another ten or fifteen points? I'm I'm sort of leaning against that now. Laney. We we've we've done a lot and there's a lot of good news in the price now.
What is driving the recent activity in Japan's bond market?
So t talk us through what's happening then uh with Japan bonds, because they are for ten years at one point nine five percent, forty years are up at three point six six percent.
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Chapters
8 chapters
1
What are the RBA and Fed expectations for policy this week?
0:02–1:32
2
How are Australian bond yields evolving and why are they rising?
1:32–3:24
3
What is driving the recent activity in Japan's bond market?
3:24–6:06
4
Why are income‑tax increase proposals emerging in Japan?
6:06–7:52
5
How did US personal income and spending perform in September?
7:52–10:03
6
What do the latest US core inflation numbers indicate for Fed decisions?
10:03–12:22
7
What do recent Canadian employment figures reveal about the labour market?
12:22–14:16
8
How might China's export trends affect global economies like Germany and the US?
14:16–15:16