War, wages and algorithms

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NAB Morning Call 15 min 2 speakers 8 chapters transcribed 19 days ago
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How are rising Middle East tensions affecting oil prices?

Phil Dobbie 0:01
War in the Middle East, is it closer than we might have thought? US equities on the rise, maybe a bit of uh buying the dip, but also some good second-tier data out of the US yesterday. UK inflation and Aussie wages data pretty much as expected, and Aussie employment numbers out today. That's the big one to watch. It's Thursday, the nineteenth of February, twenty twenty six. It's the morning call from NAB. Good morning. A big leap up in oil prices today. WTI is four point one percent higher. Brent is up three point eight percent at seventy a barrel now. US equities are climbing as well, the Nasdaq up one point two percent, not point nine percent for the S P. Europe also higher, one point four percent for the Eurostocks fifty, one and a quarter percent for the FTSE one hundred, one point one percent for the DAX, ten year treasuries we're up a couple of basis points to four point oh seven percent.
Phil Dobbie 0:49
Not much going on in Europe though. Uh the Aussie though, 10-year yields, which were up to f uh up four basis points yesterday to 4.72%, add another two basis points onto that this morning on futures. The US dollar has bounced back a little today, up almost 0.4% on the DXY, the Euro down by the same amount, and the pound and the Aussie down a third of 1%. The Australian dollar now just above 70.6 US cents. And here's NABS Gavin friend in London. Let's look quickly at that spike in oil prices first, Gavin. The the the headline on the Wall Street Journal website right now says it all Iran is getting ready for war with the United States. It's not saying that they will go to war, but they are getting ready in case those talks fail, and obviously they are a long way from a resolution there.
Gavin Friend 1:33
Mm. Morning, Phil, nice to be here. Um yeah, well, okay, you know, we saw from the talks in Geneva, didn't we, um the last couple of days that that you know both sides seem to say that they made progress. Um we know that Iran has basically now got to go off for a week or two, come up with some proposals. If those proposals satisfy the US then they'll move to what they call round three.

What is driving the recent jump in Brent and WTI crude prices?

Gavin Friend 1:55
So we might see a bit of a quiet period here, but we also know from Vice President JD Vance, you know, where he talked in the last few hours about, you know, the red lines that the US has put on Iran, that Iran is so far not willing to, you know, um to deal with. Um he noted that, you know, the the two sides the the US will certainly keep the diplomatic channels and the the the the the uh the work going uh and try and work through this. That's the aim. But there's that tacit threat, isn't there, with this huge Amada parked off the uh coast there. Yeah, and on the other side Yeah, and on the other side a
Phil Dobbie 2:32
Russian warship has arrived uh in Iran as well and
Gavin Friend 2:38
we're not seeing Bellico's language, we're just um You know, the stakes are being staked out, if you like, and uh we're now gotta watch and wait. Um perhaps it's not a surprise that uh oil's pipped up a little bit as we uh as we wait to see how this pans out over the next couple of weeks. Perhaps it'll take longer. These things invariably do. It's you know, it's a very serious issue.
Phil Dobbie 2:59
Oh, it's been going on for years really, hasn't it? Or decades. Uh so tech stocks back on the rise. Uh just a bit of rebound, I guess maybe they were a bit oversold. Yeah.
Gavin Friend 3:08
But we
Phil Dobbie 3:08
also had a guess on top of that. We had we the you know the data from the United States, second tier stuff, but it was indeed you know, it was a lot of it was better than expected.
Gavin Friend 3:15
Yeah, I mean we should expect this, shouldn't we, w with it with the AI thing? Because it's we n none of us know how it's gonna pan out. That big debate about what it does uh to workforces and that kind of thing is gonna continue for some time to come. Uh so on on any other day it will do the opposite. But I think to your point, you know, it was a day where we didn't have major data, but the the data that we did have pretty much all came in on the good side, you know, bond yields let's remember, have come down a long way, uh, pretty much everywhere, uh, over the last few weeks, and so it didn't take much to swing those yields a little bit higher.

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