Underpricing war? Pulling out of the dollar.
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Why are markets optimistic about a possible Israel‑Iran de‑escalation?
Markets are optimistic. It seems that an already overpowered Iran will look for a peaceful resolution, but that is based on a Wall Street General report and the hopes of the US President, so there's a real risk that isn't what's gonna happen. Plus, data from China shows May wasn't such a bad month, or was it, despite the tariffs of the Bank of Japan today, and a big chunk of amendments to the one big beautiful bill could be released today as well. All the contentious stuff on tax. Tuesday it's the seventeenth of june twenty twenty five. It's the morning call from Nab. Good morning. Well, the US dollar fell below ninety seven point seven today. Not the lowest it's been this year, but not far from it. It's back up to ninety-eight point two now on the DXY.
But while the Iran-Israel war continues, markets seem to have shrugged off the risk. The Aussie dollar is up naught point six percent. Actually up a bit more than that, up naught point eight percent earlier. It's uh up to sixty-five point three US cents. The pound is up naught point one percent, so is the euro. More to the Point equities have come bouncing back. So at the close, one and a half percent up on the Nasdaq, almost one percent for the SP and three quarters of one percent for the Dow. In Europe, the Eurostocks fifty closed up 0.9%, the DAC's up 0.8%, the FTSE one hundred up 0.3%, and bond yields are split depending which side of the Atlantic you're on. So down one or two basis points across most of Europe, up six basis points for ten-year treasuries in the United States.
States up to four point four five percent. And Aussie ten years that were up eight basis points yesterday to four point two three percent. Well, just one or two basis points lower than that on futures this morning. And oil coming back down two point two percent off WTI, one point eight percent off Brent, which is almost down below seventy-three a barrel now, having opened this session over seventy-eight point three.
How is the US dollar index moving and what does it mean for global currencies?
So with all that going on, you might be looking for For news of a peace deal or at least a ceasefire or an agreed date for talks, but that's not happening. Here's Nabs Rodrigo Catril. So it is all a bit c uh curious, isn't it? I think a lot of this comes from um a claim made by Israel that they've now got full operational control over Tehran, and then there was a Wall Street Journal report saying that Iran's now taken such a battering they do want to de-escalate hostilities and start to negotiate. negotiate and Donald Trump is saying he thinks that they'll uh they'll start negotiating uh as well soon. But you know what? They're still firing at each other. So um, you know, that might be the intention, but there's no evidence yet, is there?
Yeah, morning Phil. Um uh certainly there there's a general feeling here that uh Iran is um uh has its back against the wall if you like. Um and uh those reports from the Wall Street Journal suggesting that Iran has been through other Middle Eastern countries trying to um communicate to the US and to Israel that um they want to, you know, de escalate the whole thing. Um that that's certainly been the trigger for for the improvement in risk appetite. Um uh but to your point uh uh the message coming from Israel is that they still intent on keep going and uh um and I I suppose they they still are looking to um uh do more damage to to anything related to uh Iran's nuclear um programme. Um and at the moment it doesn't seem there's any appetite from the Israelis to to to calm things down from where they are.
And in fact you would argue that if if ev all the reports that we've we've been reading are right then Israel has the upper hand and and they haven't got an incentive to to slow down from here. So um for now the the the market reaction has been positive um which is been reflected in decline decline in oil prices and improvement in risk assets, uh equities and including the Aussie and the Kiwi. Um but um you know there's still that risk that that things could get a little bit messy. Uh but uh Yeah, I mean
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Chapters
8 chapters
1
Why are markets optimistic about a possible Israel‑Iran de‑escalation?
0:01–1:45
2
How is the US dollar index moving and what does it mean for global currencies?
1:45–3:53
3
What does the latest risk‑on rally in equities and bonds tell us about investor sentiment?
3:53–5:56
4
Is the market under‑pricing the geopolitical risk of the Iran‑Israel war?
5:56–8:16
5
Are central banks really pulling out of US Treasury holdings and the dollar?
8:16–11:00
6
How are China’s industrial production and retail sales influencing the global outlook?
11:00–13:05
7
What are the implications of slowing New Zealand and Eurozone wage growth?
13:05–15:19
8
Will the Bank of Japan change policy amid rising inflation and economic uncertainty?
15:19–16:48