Trade, gold, jobs and a rate cut
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Why is the Bank of England expected to cut rates tonight?
The Bank of England tonight they're expected to cut, whilst many central banks are saying the world is too uncertain right now for any definitive move, but maybe a stagnant economy in the UK demands it. Uh we'll look at that, plus the latest jobs data for the United States ahead of non-farm payrolls on Friday. And what central bank speakers have been saying it's Thursday, it's the sixth of February 2025. It's the morning call from NAB. Good morning. Well the US dollar is low again, it's down naught point three percent. There's a one point one percent lift in the yen, a naught point three percent rise in the euro, and the Aussie is up more than half a percent to just below sixty two point nine US cents.
Big falls in US bond yields, uh ten year Treasury is down eight basis points. We've got a nine basis point fall in ten year guilt yields in the UK, whereas most of Europe it's down three or four basis points. In Australia, ten year yields. Well, they fell six basis points yesterday. Down to four point three five percent and uh that is pretty much where they are this morning on futures. US stocks are higher, not so much for the Nasdaq, but uh at close it up naught point two per cent and a naught point four percent rise in the S P and naught point seven percent for the Dow. In Europe the DAX is up naught point four percent, the FTSE one hundred is up naught point six percent and oil is lower, down two percent for WTI and one point nine percent for Brenn, which is below seventy four eighty.
a barrel now. So Nab's Gavian friend uh joins me today. So yeah, the biggest moves um have been in bond yields, which have been uh fairly sedentary lately, but all of a sudden we've got this big move in ten year yields today. So what's driving that, do you think?
Yeah, but this un there's this undercurrent going through, isn't there, of uh what's gonna happen to the economy with uh with the tariffs and those kinds of things. Uh we today we got ISM services, obviously this is a important driver of the economy for the US. Um They called. Remember, uh so the ISM measure dropped back from fifty-four in December to fifty-two and a half. The consensus was unchanged at fifty-four.
How are the US dollar, bond yields and equity markets moving this morning?
Recall the smaller sample, SP version of the services PMI, the preliminary of which was released just over a week ago, sank from fifty-six point eight to fifty-two point nine. So both measures now, the SP and the ISM, are on a fifty-two handle. Um I mean it's early days, but the the new orders index is lower, lift still expanding. And it I guess uh you know, big caveat is early days, but it might suggest that the optimism seen in some of these US business barometers amid you know Trump's return, the surging animal spirits on deregulation and tax cuts is giving way or wobbling a little bit in the face of concerns on as I say, on tariffs. and jobs and prices. You know, there's a you can understand why there's a little bit of um
you know, sort of nascent concern coming in there. We'll see how it plays out, of course. Um interesting that at fifty two and change in the US ISM, uh which isn't important, as I say, it's it's the bulk of the US economy, um, it's on the same handle as Germany, um, with Europe just below at fifty one point nine. I don't think most observers would think that uh these relative readings actually reflect reality, you know, Germany versus the US. No,
I mean we've got used to the idea that the German economy is stagnant and uh and uh you know, and inflation's still uh uh hard to control and uh a different story for the United States.
Yeah, and of course these are a sort of a sentiment change, a rate of change index. They're not really uh telling you about what is the absolute strength of the economy. And I think it'll take more, as I said, I think it'll take more than one reading to to shift the dial on this. But you know, the more you get signs that perhaps the US is not, you know, maybe as strong as we thought, just looking at the uh uh Atlanta Fed's GDP now, that's It's come down to two point eight nine from three point eight eight.
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Chapters
8 chapters
1
Why is the Bank of England expected to cut rates tonight?
0:01–2:01
2
How are the US dollar, bond yields and equity markets moving this morning?
2:01–4:53
3
What does the latest ISM Services PMI reveal about US and German economic growth?
4:53–6:56
4
How is the US trade deficit changing and what could it mean for Trump’s trade agenda?
6:56–9:04
5
What do the ECB wage forecasts suggest for future European rate cuts?
9:04–11:14
6
What are Fed officials saying about tariffs and the pace of monetary policy?
11:14–13:14
7
Why is gold hitting new highs and what’s driving the yen’s recent strength?
13:14–15:16
8
How is New Zealand’s unemployment rate evolving and what are the implications?
15:16–16:38