Waller Dovish, Bessent Reassuring.
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Why did Christopher Waller’s dovish comments cause US bond yields to fall?
Our markets a little pessimistic on their pricing for the Fed this year. Well Christopher Waller seems to think so, and that's helped bring yields down a little bit this morning. But there's still a lot of uncertainty about what Trump's gonna do next week. Although Scott Bessant uh gave a reassuring performance at the Treasury confirmation hearing today. Uh the expected new Treasury Secretary isn't as alarmist as his boss, perhaps. Uh we'll also look at yesterday's Australian employment numbers. And what to look out for today. It's Friday, it's the seventeenth of January, twenty twenty five. It's the morning call from NAB. Good morning. So bond yields are falling again, down four basis points for ten year treasuries, down five in the UK, down nine in Canada.
Aussie ten years yesterday fell thirteen basis points. Now on futures a couple of basis points higher at around four point five one percent. Equities are largely down in the US. The S P finished down 0.2%. So did the Dow. The Nasdaq lost 0.9%. Europe, though, had a good day, was up one and a half percent for the Euros. Stocks fifty at close, up one point one percent for the FTSE one hundred in the UK and up two point one percent for the CAC carot in France, and the US dollar is down again. It's just not point one percent lower now, but the Aussie is not point three percent lower, the pound marginally down, the euro is up naught point one percent. The biggest move is the yen, it's up naught point eight percent.
We'll look at why that is today. It's the biggest of the uh major currencies and And oil has switched direction down one point eight percent for WTI and naught point nine percent lower for Brent, which is around eighty one thirty a barrel this morning. Uh and Nabs Rodrigo Cotrill uh has a uh rapid return to the morning call the second time this year, even though we're only five episodes in. We can't keep him off. Uh so welcome back. Uh I guess we should talk briefly, first of all, about the Aussie employment numbers yesterday. Because uh we are incidentally talking a lot more about it on the weekend edition this afternoon. But you know, generally quite a surprise, wasn't it?
What did Scott Bessent say at his Treasury confirmation hearing that reassured markets?
The number of people working has increased, but the unemployment rate is at four percent, which is where it was a year ago. Uh so that's the surprise, just the participation rate has increased so much. So what does the RBA take from this? Uh does it look and say, well, the unemployment rate is going nowhere, so we're not in a hurry to hike. How do they respond to a number like this?
Yeah, so it's a couple of things to to highlight. As you point out, you know, the the report was a very solid report. You know, we've had um a a very decent employment growth of fifty six thousand, um uh keeping the employment trend growth very elevated. Um and of course, as you also point out, the the unemployment rate is really gone sideways in a very, very tight range of three point nine to four point one uh over the last Um so why is that relevant? It's relevant because in particular the RBA uh shifted its sort of biases, if you like, in in December and highlighted um uh uh concerns that you know the the labor market will start showing signs of weakness and in fact in terms of their own forecast um they had a a much uh elevated uh unemployment rate compared to where we are today.
Um so in terms of if you like the uh reaction function of the RBA um one of the reasons why uh they they became more expected uh weakness to come through in the labor market and that's hasn't materialized. Um so um So does that mean they changed their tune then
or based on this number?
Well well it's it's interesting because uh literally in the last meeting there which was December, that's when this bias towards concerns around the labour market emerged. And of course, unfortunately for them, uh just a few days later we h we got that labor market report which was very solid, and now we got another one which is just as solid. So so um i it refutes or it it counters those those concerns. So from a
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Chapters
7 chapters
1
Why did Christopher Waller’s dovish comments cause US bond yields to fall?
0:01–1:58
2
What did Scott Bessent say at his Treasury confirmation hearing that reassured markets?
1:58–5:40
3
How did yesterday’s Australian employment report surprise analysts?
5:40–8:54
4
What is the Reserve Bank of Australia’s likely response to the latest labour data?
8:54–12:09
5
Why are US retail sales still strong despite modest headline growth?
12:09–15:37
6
How are the UK’s weak GDP and rising yields affecting the pound?
15:37–19:00
7
What do the ECB minutes reveal about a possible inflation undershoot in Europe?
19:00–20:45