The brief return of exceptionalism
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Why is the US dollar strengthening and what does it mean for markets today?
A good day for the US dollar, although as we record this, it is starting to turn a bit, but equities are higher. It's a bit like a brief return to US exceptionalism, but will it last? And it has been helped by speculation that maybe Liberation Day won't be quite as extensive as everyone has been assuming, or maybe it will. It's fair to say there is confusion as to what's happening on the tariff front and where there's confusion, there's hope. It's Tuesday, it's the 25th of. March twenty twenty five. It's the morning call from Nab. Good morning. And the twenty fifth of March, that is nineteen years married to my current wife. I'll have you know. Uh the US dollar gathered a bit more strength today. It's up naught point two percent on the DXY.
It did lose a little bit of ground later in the session. The Aussie, though, is also on the rise, up naught point two per cent, pushing over sixty two point eight US cents. The pound is flat, the euro has lost naught point two percent, a naught point nine percent drop in the yen and US Stocks back in exceptionalist mode. So the Nasdaq closed up two point three percent today, the S P up one point eight percent, the Dow up one point four percent, and the Russell two thousand finished up two point six percent. Whereas in Europe, everything is down 0.2% off the DAX, and the Eurostocks fifty naught point one percent off the FTSE one hundred, and bond yields in the US up nine basis points for ten year treasuries, whereas only minor
Movements in Europe and in Australia, well, ten year yields in Oz at four point four percent yesterday, uh, but up about five basis points on that overnight. And oil higher again, one point four percent for WTI and Brent.
How are the latest US and European PMI readings influencing equity performance?
Uh Brent now almost up to seventy three twenty a barrel. Gold lower again today as well. So why is the US back in favor? Is it the PMIs? Is it Donald Trump? Uh he is now Sally Ald. So uh let's look at those PMIs first of all, Sally, and you can tell me whether this is a constituent part of why we've seen so much enthusiasm all of a sudden. So services PMIs for the US uh higher than expected. Uh services PMIs for Europe lower than expected. So and here we are, US shares up, European shares down. Is it as simple as that?
Maybe not so simple as that, but I guess in the case of the US, um the fact that the services PMI, you know, lifted um probably just helps shift that narrative away from everyone worrying about a really abrupt slowing in the US economy and and maybe um thinking more that you know we're on a a path of gradual moderation which is sort of largely in people's forecasts at least for the first quarter. And you know I guess when you look at all the PMIs across services and manufacturing, they they were quite mixed. So for example, as you said, US services PMI was up, but the manufacturing was down in the US, whereas Europe was the reverse of that. European manufacturing PMI was up but the service So I think sort of
And
interestingly, Donald Trump is trying to tackle manufacturing, so um not working the way he wants to just yet, perhaps.
Indeed.
What role are Trump‑announced auto and pharma tariffs playing in market sentiment?
So I think probably you know a little bit little bit hard to extract too much of a signal from uh from all of that. But I think, you know, this notion that, you know, US stocks have had a a decent correction, um and you know, that maybe this idea that the US economy is not about to fall off a cliff, uh and perhaps, you know, the beginning of a new week and and uh a blank slate for the week, um, you know, has held Helped equities uh recover somewhat. And and like you said, uh you know, we've sort of gone back to um you know the reverse of the trend that's dominated for the last little while. So equities are up, but the Nasdaq is outperforming and the Magnificent Seven are back and the US dollar is stronger, particularly against those more safe haven currencies like Euro and and Yen.
Um and so we've had like a sort of mini re reversal or a mini resource. surgence, I guess, of that US exceptionalism narrative overnight.
Impossible question, is this is this part of a more sustained pullback then, or do you feel like this might just be a uh you know, buying the dip type opportunity?
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Chapters
8 chapters
1
Why is the US dollar strengthening and what does it mean for markets today?
0:01–1:34
2
How are the latest US and European PMI readings influencing equity performance?
1:34–2:58
3
What role are Trump‑announced auto and pharma tariffs playing in market sentiment?
2:58–5:42
4
Why did oil prices jump after the Venezuela tariff announcement?
5:42–7:48
5
What explains the sharp depreciation of the Japanese yen overnight?
7:48–9:42
6
How are consumer confidence and new home‑sales data expected to affect US equities?
9:42–11:05
7
Is the recent rally in US stocks a sustainable trend or just a ‘buy‑the‑dip’ move?
11:05–13:00
8
What are the key takeaways and outlook from today’s NAB morning call?
13:00–14:18