Tech looks for Fed’s gift for Christmas
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Why are tech investors eyeing a December Fed rate cut this week?
Well, it might be Thanksgiving this week, but it seems tech investors have their eyes set closer to Christmas when, if equities are anything to go by, they are clearly expecting a rate cut from the Fed, but that is quite different from where we were just a a week or two back. So are they getting a bit ahead of themselves? And some delayed data from the US today and German IFO that was not exactly brimming with confidence overnight. It's Tuesday, it's the twenty. Twenty fifth of November twenty twenty five, it's the morning call from Nab. Good morning. Well, not much movement in the US dollar or any currency really. The yen is down a third of one percent at around hundred and fifty seven yen to the dollar, still a bit off that hundred and sixty call to action mark that we were talking about yesterday.
The Aussie marginally up at sixty four point six US cents. Equities uh did get off to a good start for the week. Uh we predicted that yesterday, didn't we? The Nasdaq up two and a half percent, one point four percent for the S P, but uh not the same size move for Europe. The DAX, the best there, up naught point six per cent, and bond yields falling down two basis points for ten year treasuries, down to four point oh four per cent. Small falls in yields in Europe as well. Aussie ten years fell two basis points yesterday to four point four four percent, four point four five percent now, so not much of a move overnight. And oil uh is up about naught point six percent. Spot gold is up three quarters of one percent.
Uh it seems to have settled over the four thousand. thousand dollar mark now. Bitcoin is up about one point two percent today. So uh tracing back some of those losses. And here's Nab's Taylor Nugent. So I guess it I mean it's a s feels like it's a simple story. We saw expectations for rate cuts heighten and uh now we see stocks higher and treasury yields falling a little bit. And John Williams has uh you know just kicked all of that off and we talked about that yesterday now. Christopher Waller has weighed it in and um and that seems to have helped the argument as well.
So as you say, Christopher Walla adding adding further to those expectations that a December cut uh probably can get a lot across the line overnight. Um but yeah, I mean when you look at equity markets, it's you know two two basis points lower in tenure yields and um you know the S P five hundred on track for a more than one and a half percent gain as I look at my screen at the moment, it's a quite remarkable sensitivity from equity markets to will they or won't they on a on a December rate cut if that is the the main driver. Um but yeah, as you say, when you when you look across equity markets, they are noticeably stronger on on Monday, extending those gains from from Friday's session and not quite uh erasing all of their their gains over the the course of last week, but certainly a pretty
How did the latest US equity moves (Nasdaq, S&P) reflect rate‑cut expectations?
Well it wasn't that long ago, was it? Why in October last month where we were almost certain of a cut and then we were almost certain it wasn't gonna happen. So uh are markets g i if this is driven by the expectation that th that a cut is indeed gonna happen, are markets getting ahead of themselves a bit?
So I think it just it just comes down to kind of the absence of the the data flow has kind of changed the the script a little bit and we know that it's given it's a a challenging backdrop weighing how f F O M C members are kind of weighing the the risks on on either side of the dual mandate, given the economic backdrop at the moment, given the the lack of clarity from from data, you know, you've essentially got people kind of, you know, vote counting on on the FOMC rather than just looking for a clear steer from from the data in terms of uh determining what to do with with market pricing. So, you know, we've had that chorus of largely kind of regional Fed presidents that suggested that they weren't uh particularly in in
Declines on on balance towards a a December cut. But we know from the December the September FOMC projections, if we look all the way back there, that there was kind of a very small minority of the FOMC that was in favour of an additional twenty-five basis points of easing this year when they did that cut back in September.
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Chapters
6 chapters
1
Why are tech investors eyeing a December Fed rate cut this week?
0:02–2:38
2
How did the latest US equity moves (Nasdaq, S&P) reflect rate‑cut expectations?
2:38–6:28
3
What did Christopher Waller say that boosted hopes for a December cut?
6:28–8:49
4
Why are markets reacting differently to equity gains versus currency moves?
8:49–10:18
5
How is the lack of fresh US data (PPI, retail sales) affecting market sentiment?
10:18–11:33
6
What did Christine Lagarde say about the EU’s AI catch‑up and its economic impact?
11:33–11:39