The Bazooka, at long last?
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Is China finally launching its long‑awaited Bazooka fiscal stimulus?
So China is set to issue a lot of bonds to fund the bazooka stimulus at long last. Saudi Arabia might be producing more oil and Libya. And the latest core PCE figures will tell us the direction of inflation in the United States as we start to get CPI numbers for Europe as well. And in Japan, a leadership contest that could be market moving. We'll look at why. A lot going on today, so buckle down. It's Friday, it's the 27th of September, 2024. It's the morning call from Nab. Good morning. A sharp fall in the US dollar is down almost 0.4% in double quick time, middle of the afternoon in the United States. The Aussie is up over one per cent, almost sixty-nine US cents, the pound up a little less than naught point seven percent, the euro up naught point four percent.
Stocks have bounced back. We've got a naught point six percent rise in the Dow at the close, same for the Nasdaq, not point four per cent for the S P, yet another record close for the S P, but more in Europe, a two point four percent. Rise in the Euro stocks fifty at close. The same for the CAT Carrant and one point seven percent for the DAX. It's not extended across the English Channel. The FTSE one hundred is up just naught point two percent. But yesterday, the CSI three hundred up four and a quarter percent. Not a lot happening with bonds, though. Ten year treasuries are flat, yields up two basis points for ten year guilt in the UK, up just one in Germany and France. Aussie ten year yields were up three basis points yesterday.
To 3.94% on futures now, another three basis points higher, so just three or four basis points off four percent. And big drops in oil, three and a half percent down for WTI. Brent is three percent lower, heading down to seventy one a barrel now. It's not been this low for a couple of weeks. So quite a lot of action. We've got that fall in oil, we've got the fall in the dollar, we've got higher stocks. What's happening here? Well Nabs Reattrol uh is with me, so no big data. releases overnight.
Why did oil prices fall while the US dollar weakened?
So what's driving this? Is it all the China story?
It definitely is. Good morning, Phil. And um obviously you talked with Sky yesterday about the whole raft of uh monetary policy uh measures, some of which I think uh border on uh QE China style um from the PBOC. And then twenty-four hours on from that, um yesterday was the Politburo's quarterly meeting on economic affairs, uh and they published a readout of that. Yesterday afternoon. Um and the details are still rather scant, but it really does look as though um the big fiscal guns are being wheeled out to support the efforts of the PBOC. Um and it's clearly had quite an electrifying effect. Well two trillion yuan is the figure, isn't it? It's uh yes, but uh well I think earlier in the week we had reports of up to ten trillion yuan.
Either one of those are are big numbers certainly. As I say The details are vague, but yeah, the key sort of I guess the key quotes from that statement talk about intensifying counter-cyclical adjustments, maintaining necessary fiscal expenditures, greater efforts to halt declines in the housing market and promote a recovery. Um, it's also called for stricter controls on new residential construction. So um, as well as sort of efforts to try and put some sort of a flaw um under house prices. They're obviously also trying to going forward, you know, balancing the supply-demand imbalance by um restricting the ability of um of developers to continue building houses. At the same time, you know, they clearly want um you know unfinished um properties to be to be completed and and that's part of the PBOC's plans to provide financing there.
So all up, we sort of await developments with interest As they say, but um I'm gonna read a quote from uh one of our favourite uh external economists, not a nab economist, but he's not bad. He um he says, Look, I don't think Xi's new policies will solve China's major challenges, demographic, geopolitical, and domestic political repression, any more than Draghi's whatever it takes policies fundamentally solved Europe's economic challenges.
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Chapters
8 chapters
1
Is China finally launching its long‑awaited Bazooka fiscal stimulus?
0:01–1:45
2
Why did oil prices fall while the US dollar weakened?
1:45–4:28
3
How big is China’s planned fiscal stimulus and what sectors does it target?
4:28–6:56
4
What do the latest US GDP, durable‑goods and jobless‑claims numbers reveal about the economy?
6:56–9:19
5
How are markets pricing the Fed’s rate‑cut trajectory for the rest of 2024?
9:19–12:20
6
Which European inflation and growth data could steer the ECB’s next policy decision?
12:20–14:26
7
Who are the front‑runners in Japan’s LDP leadership race and what could their win mean for policy?
14:26–17:01
8
Why are ETFs surging and what does this mean for investors and financial advisors?
17:01–18:07