The widening Atlantic drift
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What are the latest US retail sales, industrial production and manufacturing numbers and do they signal a soft landing?
Well, as the US prepares to cut rates, possibly by quite a bit in less than twenty-four hours, with the hope of a soft landing, will Europe be forced to cut rates because of an economy that is facing a serious slowdown? The latest zoo survey for Germany was not good news and the UK economy, well that's been full of surprises, but it is struggling with sticky inflation. Will we see more of that today? Canada, meanwhile, has seen deflation. Yes, remember that? It's Wednesday. It's the eighteenth of September twenty twenty four. It's the morning call from Nab. Good morning. Yeah, the US stock market has been pretty much on hold. They started reasonably strong but drifted slower as the session went on, with the Dow closing just in the red, just meaning you have to go to the second decimal percentage point to see it.
Uh the same for the SP, which is just in the green, but pretty much flat really. The Nasdaq is up almost a quarter percent. Uh at their close, they're all holding off, aren't they? Clearly, for the Fed. Uh we did see the surprise was in the mid caps. With the Russell 2000 up three-quarters of one percent. European shares finished up, a half percent rise for the DAX, 0.7% for the Eurostocks 50, and 0.4% for the FTSE 100. The US dollar back up a little today, up 0.2% on the DXY. The Aussie is fairly flat. The pound is down 0.4%, the Japanese yen down 0.9% today. That was the big mover. Bond yields are back up, but not by much, up two basis points for 10-year Treasury is up two in Germany as well. Aussie 10 years were up two basis points yesterday to 3.83%, actually up four basis points since then on futures overnight.
And oil is up a fair pit as well. 1.8% higher for WTI, 1.5% for Brent, heading up towards 74% a barrel now. It did get up to 74.28 mid session, which is the highest it's been for a couple of weeks. But I wonder if it's high enough for OPEC Plus. So Ken Crom.
Why might the Federal Reserve consider a large rate cut despite near‑term data suggesting a soft landing?
Joins me today from NAB in Sydney. So let's start with US retail sales. Obviously we've got the FRMC just around the corner, but those retail sales numbers for August, not quite as much as expected, but not far off. So no surprises in other words. Yeah, good
morning, Phil. I think that's a that is indeed a pretty fair summary. I mean retail sales are part of a mix of US data that came in overnight that probably didn't really do anything overly helpful to discern between twenty five and fifty for the Fed tonight. I mean, you know, retail sales in particular look up point one in August. Consensus had actually been for a bit of a a bit of a fall. Um I mean a lot of the bouncing around there, um yeah, you can sort of look at you know the the X autos measure that also up. or point one. In generally the the control group, which is the measure of retail sales that flows through the GDP, that that's hitting at point three. So that does imply that the sort of at least the uh the the the flow through retail sales into the growth numbers for the quarter is actually going to be pretty solid.
And yeah when adding up all the US data overnight, we actually did see the Atlanta Fed's GDP now estimate you know i is up to three percent. So Um yeah, to the extent that the Fed is looking at growth as something they might need to be focusing on when they're thinking of of adjusting policy tonight, um, it's probably not gonna be that that huge a factor. They'll have other things to look at. Right.
And industrial production and manufacturing, both better than last time. Um so yeah, I mean it's you know, any talk about recession, uh which you know, which some people have been making noises about that. I mean it's just looking less and less likely, isn't it?
Yeah, and I mean really solid um August numbers there for manufacturing and industrial, yeah. Up up point eight for industrial production, point nine for manufacturing. Uh but came with some pretty big net revisions to the previous month. So overall the level is basically left flat. So once again, not giving you too much of a read on trend, levels are basically trending where they are.
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Chapters
8 chapters
1
What are the latest US retail sales, industrial production and manufacturing numbers and do they signal a soft landing?
0:01–1:47
2
Why might the Federal Reserve consider a large rate cut despite near‑term data suggesting a soft landing?
1:47–3:59
3
How is the German ZEW confidence survey trending and what does it mean for the ECB’s policy stance?
3:59–6:00
4
What is the current outlook for the European Central Bank – should it panic or act cautiously?
6:00–8:08
5
Why is Canada experiencing deflation and how could that accelerate its interest‑rate cuts?
8:08–10:33
6
What are the UK CPI and services inflation figures for August and why are they crucial for the Bank of England?
10:33–12:33
7
What can we expect from the upcoming FOMC dot‑plot and forecast – how many cuts and how deep?
12:33–14:01
8
How will the Fed’s longer‑run neutral rate and dot‑plot influence market expectations after the meeting?
14:01–14:01