Vietnam’s deal, UK tears and a deluge of jobs data
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How did Trump’s Vietnam trade deal and the UK welfare‑reform bill impact global markets?
Donald Trump announces a trade deal with Vietnam but it's looking less positive for Japan and markets respond harshly to a watered-down welfare reform bill in the UK and a very emotional Chancellor as well. Aussie retail numbers are soft but perhaps it's too early to respond to a data set that will soon disappear and it's jobs, jobs, jobs today with the non-farm payrolls out a day earlier than usual alongside the weekly jobless claims. It's Thursday, it's the 3rd of July 2025. It's the Morning Call from NAB. Good morning. Good morning.
So the US dollar started the session down a bit, then it climbed up 0.3% on yesterday's close, then fell back down to where it was yesterday. So it's around 96.8 on the DXY now. Consequently, not big moves on most currencies. There's little going on with the Aussie dollar, for example, or the euro, but the pound... is down 0.8%. What's more, UK 10-year gilt yields are up 16 basis points today, compared to eight for German bunds and for Canadian 10-year yields, and just four for 10-year treasuries, which are up to 4.28%. Aussie 10-years were up three basis points yesterday to 4.15%. Now on futures, about seven basis points higher than that. On shares... Well, new records. The Dow is down a little, a 0.5% rise in the S&P, though.
That's where the record's been broken. A 0.9% lift in the Nasdaq. The Russell 2000 is up 1.3% at the close, whilst in Europe, the Eurostoxx 50 is up 0.7%. The DAX is up 0.5%, but the FTSE 100 is... is down 0.1%, and oil much higher, a 2.7% lift in WTI and Brent.
What’s driving the recent surge in oil prices and how could it affect equity and currency markets?
Brent now almost 69 a barrel. So quite a few moves, particularly in the UK. Let's start on that, particularly their bond yields with NAB Skymasters in Sydney. So yes, the big move is the 10-year gilt yields. Two things that happened on Wednesday in the UK. The Chancellor, Rachel Reeves, was almost in tears during Prime Minister's question time, Let's hope markets aren't reacting to that because, you know, we don't know what's going on in their life. But we do know that the Labour Party was forced to water down its welfare reform bill. And, you know, that is supposedly going to add a lot of extra cost, which is being taken as a sign that the government will have to lift taxes at some point. I think that is what markets have been responding to.
Yeah, Phil, as you've already said, massive or big moves in gilts overnight. You know, 10 years have closed up 16 basis points. The 30-year has closed up 19 basis points. And as you've said, the driver of that sell-off in gilt yields is the uncertainty over the UK fiscal backdrop. following the Prime Minister's abandoning of the welfare reform. And I think what happened in Parliament overnight, which has caught investors' attention, is the fact that the UK Prime Minister failed to fully support Reeves in question time. So it's raising concerns that if she does, if she's not there, then what happens to her self-imposed fiscal rules and will they be dropped? And what does that mean for the UK budget? So from what I'm reading, the abandonment of that welfare reform has left a hole of around £6 billion in the UK budget.
So quite a big hole. And I think what's happening with investors at the moment is... You know, our memories, you know, bringing back memories of that spike higher in guilt yields back in September 2022, when we all
remember that.
How might the US “Big Beautiful” bill’s Senate passage influence fiscal outlook and bond yields?
The Liz Trust moment.
Yes, definitely the Liz Trust moment, which is, as you know, we remember big moves in guilt yields, which caused the BOE to eventually collapse. intervene to calm down the market. So nervous is there feeding through into the gilt market. I think what I'm reading also is that there's a bit of a lack of liquidity as well, particularly in the back end of the curve. So the
big
moves have been in the back end. Your front end gilts did Yields did rise, but not by much. They're only up about five basis points. So that push higher in yield yields has fed through into global markets and you've seen yields heading higher.
That 5.5 billion, I think it is, was 5.56, whatever. What's half a billion between friends?
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Chapters
8 chapters
1
How did Trump’s Vietnam trade deal and the UK welfare‑reform bill impact global markets?
0:01–1:42
2
What’s driving the recent surge in oil prices and how could it affect equity and currency markets?
1:42–3:46
3
How might the US “Big Beautiful” bill’s Senate passage influence fiscal outlook and bond yields?
3:46–5:50
4
Why is the US “Big Beautiful” bill stalled in the House and what could that mean for future policy?
5:50–7:40
5
What are the prospects for a US‑Japan trade agreement after recent comments on rice tariffs?
7:40–10:14
6
How reliable is the ADP employment report compared with official payroll numbers?
10:14–12:06
7
What will today’s non‑farm payrolls and weekly jobless claims reveal about the labour market?
12:06–13:23
8
Why did Australian retail sales miss expectations and what does it signal for the economy?
13:23–15:06