Sneaking in another before Christmas?
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Is the UK inflation slowdown enough for the Bank of England to cut rates before Christmas?
Inflation is slowing faster than expected in the UK. Enough for the Bank of England to slip in an extra cut before Christmas. And there's no doubt the ECB will cut rates later today. But what then? And more from China today. A further announcement on housing and debt and Australian employment numbers and retail sales from the United States as well. It's Thursday, it's the 17th of October, 2024. It's the morning call from NAB. Good morning. Well, shares have bounced back today. Well, when I say bounce back, the Nasdaq is up naught point four percent, naught point three percent higher for the S P, naught point eight percent up for the Dow. The Russell two thousand though is up one point seven percent this morning.
Elsewhere the FTSE one hundred is up one percent, uh but the Eurostocks fifty is down naught point eight percent. The C SI three hundred not happy either about the government's lack of commitment on stimulus, it's down naught point six percent, maybe That'll all change today, as we'll discuss this morning. The US dollar has switched direction. It's up a quarter percent.
How are global currencies and bond yields reacting to today’s market data?
The euro is down by the same amount, the pound and the Aussie both down half a percent, the Swiss franc down a third of one percent, and bond yields are lower again, down two basis points for 10-year Treasuries, down ten basis points uh for 10-year guilt yields uh this morning, down eleven, in fact, for two-year GILTs, down four basis points for ten-year bundles in Germany. Aussie 10 years yesterday, down five basis points to 4.2%, just one basis point lower than that this morning. And oil down a little. Well, uh 0.2% lower for WTI. Brent is flat at $74.25 a barrel. And Ken Compton joins me today from uh NAB in Sydney. So the FTSE in the pound, I think that's easy to explain today, isn't it? UK inflation, a big surprise.
Core CPI. Up just naught point one percent for the month of September from naught point four percent in August. That is well below expectations. So that changes things a bit, doesn't it? Yeah, good morning, Phil. What
Certainly it's not completely completely out of the bounds of expectations, but certainly doesn't um doesn't uh hurt the prospects of the BOE continuing to ease. Yeah, that puts the UK in the sub two percent headline inflation club. Um yeah, one point seven percent year on year.
Did travel‑related costs drive the UK inflation surprise and what does it mean for future rate cuts?
And even the core rate down to three point two. Now, I mean looking at the composition there, a lot of people have been pointing out that it was a few um few travel costs that were a bit chunk of the downside surprise, um particularly airfares and hotels, but even if you strip those out you still had a pretty comforting print there for the for the BOE. So I think um that that is certainly gonna that's reinforced the expectation they're gonna go by t by twenty five in November and I think it's even added a little bit to um to December as well.
Yeah, question is, yeah, are they going to slip another one in? Of course it could go up again, couldn't it? So food food prices were up. They weren't down, even though the retail prices generally were down and they've got an energy cap which is gonna add ten percent to the cost of fuel prices for for most people, which has just kicked in as well. So that headline rate will go up almost certainly.
Yeah, and that has been the BOE's um point of caution and in fact several other central banks have been pointing that out as well, though the E C B being another notable one that I'm sure we'll talk about in a few seconds, where like the BOE, they've been warning that uh there is gonna be a temporary dip in inflation around mid year just due to you know base effects as as well as a few other things and those subsidies are a part of it, you know, and we're gonna see that debate here in Australia in about um eleven or twelve months as we get to the end of Some of the uh electricity subsidies fading out here. So the U Europeans are just getting to that a little bit a little bit ahead of time. But I guess comfortingly the core inflation numbers are are sitting um okay as well.
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Chapters
8 chapters
1
Is the UK inflation slowdown enough for the Bank of England to cut rates before Christmas?
0:01–0:56
2
How are global currencies and bond yields reacting to today’s market data?
0:56–2:09
3
Did travel‑related costs drive the UK inflation surprise and what does it mean for future rate cuts?
2:09–3:49
4
Why is the services component of UK inflation still above the BoE’s target?
3:49–5:08
5
What is the Reserve Bank of New Zealand’s stance after its recent rate‑cut cycle?
5:08–6:18
6
How much employment growth is needed to keep Australian unemployment stable?
6:18–7:26
7
What does Australia’s above‑3% GDP growth indicate for consumer spending?
7:26–8:39
8
Are there any major new developments from China’s housing ministry today?
8:39–10:33