RBA. The first dove of Christmas.
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Why is the RBA being described as ‘dovish’ and what does that mean for rates?
Well, a fairly dovish RBA, but there's supposed to be two turtle doves at this time of the year, so who's gonna be next? Well, the Bank of Canada is expected to drop race by fifty basis points today. Can't get much more dovish than that, I guess. Later on, we get inflation numbers for the United States as well, ahead of the Fed next week. And two outliers when it comes to inflation, the cost of a Christmas dinner and the price of coffee. Disaster. It's Wednesday the eleventh of December, twenty twenty four. It's the morning call from Nab. Good morning. Well, the US dollar is up a quarter percent on the DXY. It was up uh over naught point four percent not so long ago, but now it's a quarter percent up, the euro falling by the same amount.
Uh the pound is up naught point two percent, but a naught point nine percent fall in the Aussie dollar back down to just above sixty three point eight US cents. Bond yields are a little mixed, so up two basis points for ten year treasuries, up five basis points for ten year Gilts in the UK. But Aussie ten years They were down six basis points yesterday to four point one four percent uh on futures now, back up four basis points on that, and US equities are finishing at session lows in the red. So 0.3% down for the Dow and for the S P, a quarter percent down for the Nasdaq, the Russell two thousand is down naught point four per cent, and stocks down in Europe as well, the Eurostocks fifty uh losing 0.7%, 0.9% off the foot.
And oil, well it was up, now it's not. So WTI was up three quarters of a per cent not so long ago. Uh now it's just in the green, and Brent now down naught point two percent to just about seventy two a barrel, and gold is up one point two percent today as well. So the RBA uh were responsible for a few changes in the markets yesterday. Here's JB Weir Sally Old, but not JB Weir for very long because you're carrying back into the main nab fold as the new chief economist from next year. So congratulations on that. When uh so when does the new gig start? And more importantly, you know, with this new gig, are you still going to be on this podcast next year?
Okay, so let's answer the most important question first. So yes, definitely definitely gonna be on the podcast next year. Right, cool. We don't care when you're anywhere else. And then uh and then uh uh I won't start in that role until uh the very end of end of March.
How did the RBA’s statement and press conference affect global currency markets?
So as far as we're concerned, nothing changes. Uh so that's good news. So look, the RBA yesterday, uh you'd have to have been living under a rock, wouldn't you, not to have heard the uh the there was this more dovish tilt, uh first of all from the statement and then from the press conference. So they kept Drace on hold, but maybe not for many more meetings. So NAB has g you know got a cut penciled in for May at the earliest. But maybe th maybe that's changing now.
Yeah, maybe. I think um, you know, the governor in her press conference was still at pains to emphasize the data dependency between, you know, here and and the first meeting of twenty twenty five. Um but, you know, markets took the statement and her commentary at in the press conference as a as a dovish pivot. Um they did change the language in the statement. That was clearly deliberate. But I think she what she was really saying is that You know, we wanted to reflect what we'd seen in the data, and the data have been mixed um and on net weaker than they had expected. So she called out in particular the wage price index, the GDP numbers, she talked about the NAB survey for November, uh, which came out yesterday in her press conference, and said that, you know, even though household consumption was doing better, um, it was still lagging relative to the RBA's um expected trajectory.
So I guess she was sorta saying, you know, the economy it appears to be softer than we thought and all else equal That gives us a bit more confidence in the trajectory of inflation. um from here. And so maybe the the narrow path that she's talked about isn't looking so narrow um anymore.
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Chapters
4 chapters
1
Why is the RBA being described as ‘dovish’ and what does that mean for rates?
0:01–2:16
2
How did the RBA’s statement and press conference affect global currency markets?
2:16–7:50
3
What insights does Sally Auld bring on inflation risks and the timing of an RBA rate cut?
7:50–11:27
4
Why does the RBA’s language shift suggest a softer economy and what are the implications for inflation forecasts?
11:27–14:41