Let's start with the big tech earnings.

Yeah, absolutely.

So about a third of the S&P 500 companies are actually reporting this week.

Some of the big names inclusive.

So we've got Amazon, Alphabet and Microsoft all out later this week.

That'll obviously be a really big focal point for markets given the The focus on AI, what we saw last week in terms of a bit of a sell off in terms of some of those big tech names.

Caution still around just how much the payback that these companies are seeing on the huge amounts of money that they are spending.

Big question over whether the amount they're investing, these AI companies, is, you know, if they're going to get it back

So are we just sort of seeing all hunky-dory in the kitchen again? We're all expecting massive earnings out of Meta and Friends and everyone's back to following the tech trade.

Yeah, look, I mean, obviously it was quite a reversal in the last 24 hours compared to what we've seen last week and pretty much a sort of matching rally in terms of the things that were under pressure from the past sort of five or six days.

Now, is it all hunky dory? The big question mark, I think, you know, AI jitters are continuing to sort of plague markets.

There's lots out there that markets couldn't could be worried about at the moment.

You think about the Middle East, we've got elections coming up both here and in the US.

There's rising unrest in Europe at the moment, and bond yields have been rising pretty consistently for the last three months.

So lots of things you could be worried about, but actually what markets are really primarily focused on, I think the focus is switching back to, is what's going to happen with Q3 reporting season.

What are we expecting, do you think?

What's going on?

Yeah, look, that was definitely the hope.

I think what you're looking at is when you look at that monthly inflation number, about half of that is made up of a 9.1% increase in gasoline prices.

So that's no surprise to anyone.

The key thing that the Fed's gonna be k- keeping a really close eye on, though, is whether you start to see that spilling over.

Same thing as our central bank's looking at.

Um, we were looking at perhaps one more rate hike before the end of the year from the Fed.

And now look, in tech, uh, you would've expected probably a bit of a lift today on markets, potentially maybe with ASML reporting.

What is it that you're watching to see whether the equity markets will continue to shrug it off or start to reflect that concern?

Yeah, absolutely.

Look, I think corporate profits this coming few weeks are gonna be a really key one, and the expectations are pretty high for that.

I mean, we saw a really stellar Q2 reporting season.

Expectations are for 30% year-on-year earnings growth coming through this season as well.

Now, a lot of that has been driven, or expected to be driven, by things like energy prices, obviously with what's going on in oil and gas markets at the moment as a side effect of the Middle East.

The other thing that keeps, you know, outperforming and beating expectations is the technology sector.

And what are you gonna be watching on the local front back home this week?

What's happening?

Yeah, so look, I think going into the end of last week, there was a little bit more hope that we might see some further progress in talks, bit of a deal, at least a ceasefire, truce, temporary in the meantime, while everyone tried to figure out what they were going to do.

That looks to have been pushed back on over the weekend by Trump.

So expect that that will put the pressure, puts pressure back on oil prices when they open today.

Look, in terms of sort of the general vibe of what's going on in markets at the moment, I think there's sort of a bit of an absence of company news happening.

We've got a couple of companies out this week, but nothing too major.

Focus back on economic data.

Can I also ask you about offshore news? We're going to get an RBA decision, which is likely to be a hike.

Now, what are the markets looking like? Well, how did they finish last week?

Yeah, so look, it was a bit of a mixed week last week.

Lots of news for markets to digest.

Obviously, oil sticking above $100 a barrel.

We had the Fed policy decision hiking interest rates.

We had the Bank of Japan also following suit and hiking on Friday up to the highest interest rate they've seen in about 31 years at 1.25%.

Doesn't sound like much in the scheme of where we've been in New Zealand, but for Japan, that's a very elevated interest rate versus where they've been through history.

What about the New Zealand dollar? It's been hitting new lows and do you think it will go lower? Do you think it will recover? What's the story?

Hardly a surprise on the hike, right? But what are we making of the context for it so far?

Yeah, look, as you say, I think that very much was expected.

The market was 90% priced for a rate hike, so delivered on that, which was good to see.

Look, in terms of reading through the statement, obviously we'll get a bit more from the press conference, which is on currently.

But what we saw is that generally the economy is doing slightly better than they were expecting.

That's come through in the economic projections.

You're looking at slightly stronger growth, slightly stronger inflation with that, and a slightly lower unemployment rate when you look at the dot plot.

Is that, you know, that's almost a direct reaction to the commentary that's come out of there?

We've got US, we've got Japan, we've got Bank of England this week, right?

Yeah, absolutely.

A busy week for central banks and look, a particularly interesting backdrop for this decision from the Federal Reserve.

So the Federal Reserve is now increasingly expected to hike 25 basis points this week.

That decision is out at 6am on Thursday morning our time.

But why it's such an interesting backdrop at the moment is because global bond yields have just continued to grind higher over the last couple of weeks.

So what we're seeing in terms of the US 10-year Treasury rate, which is essentially a bit of a benchmark rate for global interest rates, both in the US but also has an impact on what happens here in New Zealand, those are almost hitting that sort of critical tipping point at around 5%.

Is it affecting the yields on bonds here? Do we know an answer to that yet?

Hey, Zoe, how much of this is really then that Mideast tension?

Yeah, look, I think there's a combination of things, right? So quite rightly, as you've pointed out, that oil price back over $100 a barrel is sort of a psychological level for markets as well.

Starting to head up towards, you know, over 100, towards 120 now becomes increasingly concerning.

I think people were kind of prepared to tolerate it as long as it stayed below 100.

Um, the other factor, as you've quite, you know, also pointed out, is what's happening with yields, and that's really the key two stories I think dominating markets at the moment.

You've got a pretty absent, uh, reporting season sort of calendar at the moment.

There's no real company news.

And, you know, a lot of the commodity prices are still really supportive, even if you've got high input costs, right? There are still some good margins there.

Zoe, which bit of that are investors buying?

Yeah, look, I think the track overall was a bit of a surprise for markets.

When you look at where market pricing had got to, we're talking about an OCR of 3.5% in the middle of next year, heading towards 4%.

RBNZ quite clearly stated yesterday they're thinking one, maybe two more rate hikes.

That's quite a contrast to where markets were thinking.

Now, look, I think when you look at the divide between the committee around inflation risks versus sort of a more balanced outlook.

Couple of things.

That's likely to push up some of those commodity prices that we're already paying too much for at the pump, right?

Did he give us any hints on what inflation might be doing, what interest rates might be doing in America?

Yeah, so this was really a hotly anticipated speech going into this, probably one of the most in a few years, I'd say.

So look, he did give the market something finally, which was long awaited, as I mentioned.

Look, what he did say is that he's clearly concerned about inflation, very much focused on getting inflation back under control.

The US economy is doing well, everything's ticking along quite nicely there.

But the key thing was that he really did quite clearly suggest that interest rates will probably have to rise at some point.

And so that was A little bit of clarity for the market, I think, after he's very much stepped away from forward guidance.

Hey, reporting season, we've still got some dribs and drabs coming this week, right?

What's the latest with the bond markets? We've been following this quite closely here on the program.

Yeah, look, last week was a pretty volatile week for global bond markets.

Very much concentrated, I guess, in the US as well.

And we saw US Treasury Secretary Scott Besant intervening in the bond markets and promising to step up bond purchases.

Look, that had a very temporary ameliorating effect in terms of the actual market reaction and market movements.

I think that's set to continue to play out this week.

I do think it is worth remembering, though, we have been through this before.

In terms of data, we've got a whole bunch coming out this week, but in New Zealand, starting today with retail sales?

Now, tell me, how are we looking this week?

Yeah, it's going to be a busy one this week, particularly locally and in Australia as well in terms of reporting season.

So things really do kick into gear.

We've got A2 Milk and Freightways out this morning.

A2 Milk shouldn't be too many surprises given we saw a July update from them anyway.

Freightways, we are going to be looking closely, expecting a decent 2026.

But question marks kind of over forward guidance as we head into next year as well.

Zoe, what are you expecting out of that labour market data from Australia?

Back home, RBNZ inflation expectations, what are you expecting?

Yeah, look, this will be a key one for the RBNZ.

When you think about what they're facing with inflation pressure at the moment, the really tricky bit, right, is trying to figure out just how much of the oil price shock is going to feed through to broader economy.

One of the ways that they're watching how much sort of that impact that will be is through things like inflation expectations and what businesses and consumers are expecting inflation will be, which gives more room for businesses to put up prices, becomes sort of more embedded in your economy if people continue to expect higher and higher inflation.

So the key things are they measure a range of terms.

So one year ahead, two year ahead, five years ahead.

Probably that two year ahead is really the key one to watch.

But we also have migration data out this week, Zoe.

So, good times ahead?

Yeah, look, absolutely.

I think, you know, there's a bit of something for everyone in yesterday's unemployment report.

Obviously, the headline, you know, going back up to 5.6%, 11-year high, doesn't sound particularly good at that level.

When you do look under the hood, it was much more mixed in terms of what the data was saying.

So we saw, as you quite rightly mentioned, employment was much stronger over the quarter than perhaps people expected, especially given everything that was going on in June.

And we were seeing quite a lot of hiring and caution coming in from businesses during that period where you had Middle East uncertainty overhanging them.

Some questions there I suppose around just how much surplus capacity there actually is out there in the economy at the moment.

What were the trends?

Yeah, look, so July was a bit of an interesting one.

What I think we saw was, you know, there's not that too much news at a headline level.

What we saw was a bit of a rotation, though, just in terms of leadership and in terms of what was happening under the hood.

So a couple of examples of that are obviously we've had a bit of a rocky ride for technology stocks over July.

In aggregate, that saw the NASDAQ down 3% for the month and S&P pretty much flat, whereas actually we've seen some better results if you look at Australia, Europe, the UK, all actually doing a bit better than the US market last month.

Looking at New Zealand, we were up 0.6%.

But what are you looking for this week? We've also got labour data coming out.

How is that affecting rates at this point then? And people more or less expected that or was there still a bit of creep back because there was a whisper that there might be actually be a hike at this meeting?

Yeah, look, the markets were about 35% price for a rate hike.

So, you know, a decent chance that they would actually move at this meeting.

And that has seen interest rates pair back on hold decisions.

So we've got rates across the curve have fallen in response, generally seen a positive market reaction in the equity market as well.

It's provided a bit of boost to the S&P 500, which was down going into the decision.

I think looking forward, you know, what the key thing is obviously going to be is what happens in the Middle East, how much of a flow-on effect are we seeing from inflation through to broader price pressure.

It's a lot harder to get to the bottom of this, isn't it?

What can we expect from each of those?

Yeah, absolutely.

So everyone is expected generally to remain on hold, but that doesn't sort of mean that they're not going to be interesting.

This will be the second meeting of the US Federal Reserve with Kevin Walsh as the new Fed chair.

He's been very reticent about giving forward guidance.

So he's still running a press conference, but that will be a key one to watch.

Markets are actually about 35 percent pricing and a bit of a chance that rates might move at this meeting.

Any idea of when we might see some hikes? Looking at that from England to Japan too, right?

Zoe, how is that all affecting cash in the bank?

Yeah, it's a great question, Garth.

And obviously what we've seen over the last six months has been this expectation that the Reserve Bank was going to have to start lifting interest rates, partly in response to what we're talking about in the Middle East at the moment.

Now, that's been pressuring what we call the wholesale swap rate curve, so basically the benchmark for retail banks' mortgage and term deposit rates.

that's been pressuring it higher, particularly even over the last month that's gone up by about 30 basis points.

You're seeing mortgage rates and TD rates on the other side both respond, A, to what's been happening in the wholesale rate market, and B, obviously, that Reserve Bank rate hike that we have had a few weeks ago.

What we're seeing is that term deposit rates, if you look at something for about six months, you're getting about 3.5% in the bank.

Is it hard to imagine that they'll surprise people with a big upside?

Zoe, how is it all affecting cash in the bank?

Yeah, it's a great question, Garth, and obviously what we've seen over the last six months has been this expectation that the Reserve Bank was gonna have to start lifting interest rates, partly in response to what we're talking about in the Middle East at the moment.

Now, that's been pressuring what we call the wholesale swap rate curve, so the- basically the benchmark for retail banks' mortgage and term deposit rates.

Um, that's been pressuring it higher, particularly even over the last, you know, month that's gone up by about 30 basis points.

You're seeing mortgage rates and TD rates on the other side both respond, um, A, to what's been happening in the wholesale rate market, and B, obviously that Reserve Bank rate hike that we have had a few weeks ago.

What we're seeing is that, you know, term deposit rates, if you look at something for about six months, you're getting about 3.5% in the bank.

Uh, if you look out further, say one or two years, you're probably getting something closer to 4%.

Uh, uh, is it hard to imagine that they'll surprise people with a big upside?

Oil prices, how are they doing and how are they going to go, do you think, this week?

Yeah, look, absolutely.

We've got another weekend of strikes with US-Iran.

Uh, oil prices were back above sort of $88 a barrel over the weekend.

Um, look, given what we've seen over the weekend, I wouldn't expect to see oil come down much in this week, if at all.

Um, obviously, it seems like both sides are quite entrenched in their positions currently.

Um, what was really driving markets, though, at the end of last week, wasn't, um, Iran, it was really concerns around the semiconductor space, though.

How are markets rea- reacting to that?

How do you think it will affect reporting season, which is still ongoing, of course?

Yeah, look, so we do really kick off Q2 global reporting season this week, and I think that really will be the primary focus.

You know, as Garth just mentioned, I think markets are sort of underplaying or, you know, looking through some of the noise that we're seeing around the Middle East tensions, you know, is it on again, off again, conflict rearing up? Is there a peace treaty going to hold? And look, for now, I think markets are taking the more sort of optimistic view that this is a temporary setback.

Q2 reporting season, look, we're going into this with some pretty optimistic outlook.

So you're looking, markets are expecting in general earnings growth of 23.6% year on year.

So that would be a pretty solid number if delivered.

And that's really being led by expectations around energy companies on the back of what's been happening in the Middle East, but also technology companies as well, where we've seen earnings continue to be revised higher in terms of expectations for what's coming out.

Back home, what starter are we expecting this week?

Now, Wednesday, we have our OCR announcement and you're leaning towards, because the bank economists are all pretty much split, you're thinking maybe they will do a hike and then hold.

Yeah, look, I think this one is really going to be a bit of a head scratcher.

Obviously, we had a split vote at the last meeting, so 3-3 with Governor Bremen having to cast the deciding vote.

So look, I think it's going to be still pretty finely balanced.

Obviously, since May, we've had the cessation of the war in Iran.

So hopefully, you know, the conflict in the Middle East is...

Seen oil prices come down quite materially.

Do you think there's merit in that sort of look at it?

Now Wednesday we have our OCR announcement and you're leaning towards, because the bank economists are all pretty much split, you're thinking maybe they will do a hike and then hold.

Yeah, look, I think this one is really going to be a bit of a head-scratcher.

Obviously, we had a split vote at the last meeting, so 3-3, with Governor Bremen having to cast the deciding vote.

So, look, I think it's going to be still pretty finely balanced.

Obviously, since May, we've had the cessation of the war in Iran, so hopefully, you know, the conflict in the Middle East is...

I've seen oil prices come down quite materially.

That should change their inflation outlook going forward.

Do you think there's merit in that sort of look at it?

What's happening here?

Good morning, Ryan.

Well, look, I think you actually did a really good job just summing that up.

What we've seen over the past six to 12 months has been some pretty, um, you know, astronomical gains really.

When you look at things like the semiconductor index or the SOXX, as it's called, you've seen that go up 100% year to date.

Now, those type of gains often have to come back to reality at some point.

It's been really fueled by this bottlenecks we're seeing in the AI space around, particularly around memory and hardware.

You know, how much is that, uh, sort of as a backdrop playing into this?