Bank of England hikes rates
24.3.23 US equities are higher after yesterday’s weak close. US short end rates are lower, while longer term rates are steadier. US dollar is broadly unchanged, while somewhat better risk appetite sees NZD outperform, notes BNZ Markets this morning. “The BoE hiked 25bps, taking its Bank Rate to 4.25%, and maintained guidance that further tightening is possible if inflation pressures warrant,” adds Doug Steel. The minutes noted ‘if there were to be evidence of more persistent pressures, then...
Dovish Fed and a weaker USD
Initial market reaction to the latest Fed policy update has been lower rates, modestly stronger equities and a weaker US dollar, notes BNZ Markets this morning.. “The Fed opted for a dovish 25bps hike, as widely anticipated, but ahead of the meeting there was some uncertainty about how the Fed would proceed in the face of recent turmoil in the banking sector,” says Jason Wong, senior markets strategist.. “So after much speculation about what the Fed would do today, it hiked by 25bps to...
Risk appetite improves; NZD eases
Equities and global rates are higher, encouraged by the moves of authorities to support the banking system, says BNZ Markets this morning. “There is now slightly more conviction that the Fed will deliver a 25bps hike in the next 24 hours.” Says Jason Wong, senior market strategist. The NZD, AUD and JPY have underperformed against the backdrop of higher global rates. “Risk appetite has improved as investors have become more comfortable that conditions in the banking sector have stabilised,...
Market less volatile but fresh questions arise
Market conditions have been volatile following the deal brokered over the weekend for UBS to buy Credit Suisse, notes BNZ Markets this morning. The US 2-year rate has traded a 40bps range. Both the 2 and 10-year rates are currently higher on the day. Equity markets are higher, recovering from earlier losses. The NZD’s move early yesterday above 0.63 proved short-lived and it has settled around 0.6250, underperforming for the day and down on all the key crosses, says Jason Wong, senior markets...
Kiwi dollar outperforms on nervous markets
Fears of bank contagion risk continued to grip the market at the end of last week, notes BNZ Markets this Monday morning. Key US and European equity market indices fell by over 1% on Friday, credit spreads widened, global rates tumbled back down towards the lows seen earlier in the week and the USD remained under pressure. The NZD finished the week on a strong note, outperforming to see it close near its high for the week, just under 0.6270. “At the end of a tumultuous week in markets,...
Market nerves are settling
17.3.23 Market sentiment has improved over the past 24 hours. Equity markets are up, bond yields generally higher and flatter, credit spreads tighter and the fear factor has eased somewhat, says BNZ Markets. “Some big moves continue in rates, not so much in currencies,” says Doug Steel. Oil prices have recovered some of yesterday’s losses. “Market nerves were soothed to some extent yesterday with the announcement that Credit Suisse would borrow as much as CHF50b (around US$54b) from the Swiss...
Credit Suisse worries rattle markets
Lack of confidence in the Swiss bank Credit Suisse rattled global markets overnight. There was a plunge in risk appetite said BNZ Markets senior markets strategist Jason Wong - with weaker equities led by banks and energy as oil prices plunged 6% and wider credit spreads. "Markets are in turmoil again, after a loss of confidence in Credit Suisse spilled over. Banking stocks are under pressure again, leading falls in equity markets, while credit spreads have widened significantly....
Currency markets calm while rates gyrate
Trading conditions have been wild, but there are hints that the worst of the volatility might be over, with US banking stocks recovering strongly, comments BNZ Markets this morning. “This has seen the US 2-year rate rise significantly, and with another nudge higher after US CPI data showed still too-high inflation for comfort,” says Jason Won g, senior markets strategist. “The US 10-year rate is up modestly from the NZ close. Currency movements have been well contained, with the NZD settling...
NZD and AUD rise during market turmoil
14.3.23 Markets remain in turmoil following the collapse of SVB and closely followed by another much smaller crypto-focused bank, says BNZ Markets this morning. “US Treasury yields have plunged, led by the short end and the USD has been whacked,” says Jason Wong, senior markets strategist. “Closing of positions have likely exacerbated moves. “Some bank stocks have collapsed but US equities have been supported by solid gains for the rate-sensitive sectors. Risk appetite is weaker, but the NZD...
SVB collapse brings fall in risk appetite
13.3.23 The collapse of Silicon Valley Bank put in a tailspin, risk appetite plunging on fear of contagion risk but US authorities are on front-foot to contain the fallout, says BNZ Markets this morning. The bank collapse overshadowed the latest US employment report that showed strong employment but unemployment rises and wages soft BNZ Markets senior market strategist Jason Wong commented this morning, “The collapse of Silicon Valley Bank, a large US bank, was a key driver of markets...
Kiwi dollar pushes higher
Newsflow has been light but weaker US labour market data helped drag US Treasury yields lower, with the 2-year rate back below 5% and the 10-year year below 4%, notes BNZ Markets this morning “The data helped sustain earlier weakness in the USD. The NZD has pushed up to 0.6130,” says Jason Wong, senior markets strategist. “The BoJ will be in focus today for Governor Kuroda’s final meeting with an outside chance of a surprise policy move. Apart from that risk, trading conditions are likely to...
Calmer tone on markets
9.3.23 The market has calmed down following yesterday’s post-Powell testimony move, says Jason Wong at BNZ Markets. “Still the US 2s10s yield curve has inverted further to minus 110bps, with slightly higher short rates and lower long-term rates, the 10-year at 3.95%. US equities are flat, while the USD has fallen slightly overnight. The NZD sits just over 0.61 after falling below that mark near the NZ close. “Overnight, Fed Chair Powell faced another session in front of lawmakers where he...
NZ dollar at fresh low for 2023
8.3.23 The New Zealand dollar is down to a fresh low for the year, just below 0.6125, while the NZD/AUD temporarily breaks up through 0.93, says BNZ Markets this morning. There is also added weakness for AUD and GBP. BNZ Markets’ senior market strategist Jason Wong says US Fed chair Jerome Powell was evidently more hawkish in his comments to a Congressional committee than the market expected, with his comments sending short rates higher, inverting the 2s10s curve to more than 100bps, driving...
Anzac currencies have weak start
7.3.23 The NZ dollar and AUD are weaker following the weekend news of China’s underwhelming 5% growth target for this year, notes BNZ Markets. NZ rates saw a decent fall yesterday on global forces, says Jason Wong, senior markets strategist. “There has been some notable action in the rates market and euro after some hawkish comments by the ECB’s most hawkish GC member. Ahead of the ECB meeting next week, where a 50bps hike can be taken as a given, the focus is on the scale of hikes thereafter....
Flat weekend for the Kiwi
Despite a strong US ISM services report Friday night, US Treasury yields fell, with the 10-year rate down 10bps, closing at its low for the day. US equities finished the week strongly. Higher risk appetite saw a broadly weaker US dollar, but the NZ dollar underperformed and was flat at 0.6220, although it still ended up at the top of the leaderboard for the week, says Jason Wong at BNZ Markets. NZ rates finished the week higher, but the bias will be for some reversal on the open this morning....
Kiwi dollar retraces on USD strength
3.3.23 Global rates have continued to push higher, not helped by strong Euro area inflation data and a revision that saw higher US unit labour cost inflation alongside still-low jobless claims figures, xsays BNZ Markets this morning Equity markets remain surprisingly resilient against the backdrop of higher rates, notes Jason Wong, senior markets strategist The USD has been broadly well-supported, seeing the NZD retrace back towards 0.62. In economic news overnight, US initial jobless claims...
NZ Dollar out-performs
1.3.23 Net currency moves have been modest, but with notable NZ dollar outperformance, with a break above 0.62, notes BNZ Markets this morning. NZ rates were lower into month-end, after their recent grind higher, says Jason Wong, senior markets strategist. European rates pushed higher after stronger inflation data, spilling over into US Treasuries, but with further confirmation of strong resistance for the 10-year rate to break above 4%, says Mr Wong. “Euro area inflation was in the spotlight...
Sterling outperforms after EU-UK deal
1.3.23 It has been a typically quiet start to the week, with modest market movements after the recent carnage seen in the bond market, notes Jason Wong, senior markets strategist at BNZ Markets. . US Treasury yields are down a touch and US equities are modestly higher. GBP has slightly outperformed after the UK and EU agreed a new trading deal with respect to Northern Ireland. The NZD is little changed around 0.6160. As month-end approaches, the US Treasury market shows signs of consolidation...
Modest moves on financials markets
24.2.23 Market movements have been generally modest, with limited news flow, notes BNZ Markets this morning. US equities are lower, while the USD is a touch higher and US yields marginally lower, says Doug Steel, senior economist. Oil prices have recovered some recent losses. The second estimate of Q4 US GDP came in at 2.7% which was marginally lower than the initial print and under expectations. “With core PCE inflation being revised higher to 4.3% at the same time, it looks like a case of...
Flatness to currency market
23.2.23 The NZ dollar has been flat overnight after a small lift after the RBNZ delivered the widely expected 50bps hike. Market reaction to the MPS has been muted overall, says Jason Wong, senior markets strategist at BNZ Markets. Mr Wong says markets were quiet overnight with some anticipation of the minutes from the FOMC’s early-February meeting due at 8am. “Since that meeting the run of data has been stronger than expected, financial conditions have notably tightened, and we have heard ad...
Soft Kiwi and AUD as PMI lifts USD
22.2.23 Stronger services PMI data moved the market, with good news on the economy representing bad news on the monetary policy outlook, says BNZ Markets this morning. Global rates are notably higher, with the US 10-year rate peaking just under 3.95%, and equity markets are much weaker, notes Jason Wong, senior markets strategist. The USD has outperformed against all bar GBP, given an outsized move on UK rates. The NZD is weaker, but key support at 0.62 has held. “The market has been trading...
Quiet start to most markets
21.3.23 It has been a very quiet start to the week, with the US President’s Day holiday and little news, notes BNZ Markets this morning The US President spent the day visiting Kyiv, where he met Ukraine President Zelenskiy and pledged “unwavering support” for the country. “While off the headlines and no longer a market mover, the war in Ukraine continues and there are signs that Russia is preparing for a larger offensive which will involve more air power than used to date. Almost one year...
Market discounts 75pt OCR possibility
The NZ dollar closed for the weekend just under the 0.6250 mark after a test of the key 0.62 support level. US Treasuries showed a sharp turnaround Friday night, with yields closing lower after trading at fresh three-month highs, notes BNZ Markets. The USD tracked the turnaround and finished modestly weaker after heading higher through the Asian trading session. There was little news on Friday to guide markets but there was still some notable price action, says Jason Wong, senior markets...
Strength in data on US inflation
17.2.23 US economic surprises for January keep coming, with the recent string of positive activity indicators now followed by surprising strength in PPI inflation, comments Jason Wong, senior markets strategist at BNZ Markets this morning. “US Treasury yields pushed higher, not helped by hawkish comments by the Fed’s Mester, but have reversed somewhat since. The data pushed the USD higher overnight while US equities showed modest falls. “The combination of a weaker Australian employment report...
NZ dollar drifts lower
16.2.23 A generally stronger set of US data has seen interest rates push up and risk asset prices subdued, notes BNZ Markets. US bond yields are generally higher, led by the longer end, while equities are marginally lower and the US dollar stronger. Commodity prices are generally lower, and the NZD slipped under 0.63. “US retail sales was keenly anticipated and came in hot,” says BNZ Markets senior economist Doug Steel. “Total sales rose 3.0% m/m in January which was stronger than expected...
Sticky inflation in US
15.2.23 The key US inflation report was in line with the consensus, but there is some impatience with how slow inflation pressures are moderating, motes BNZ Markets this morning US equities are modestly weaker and Treasury yields have risen as the market prices in a tighter policy trajectory from the Fed, continuing the theme in the lead-up to the release, says Jason Wong, senior markets strategist. Net currency moves have been modest, with the NZD spending most of the night between...
Markets look settled ahead of US CPI
14.2.23 If there were any market nerves ahead of the release of tonight’s key US CPI report, it isn’t obvious by looking at overnight trading, says Jason Wong at BNZ Markets. “Perhaps a reflection of how the market traded through last week, when US equities fell and global rates skyrocketed. “Markets have settled, with the S&P500 currently up 1%, the Nasdaq up 1½% and modest changes in US Treasuries, albeit with a clear flattening bias – the 2 year rate up 2bps to a fresh 3-month high of...
Canadian dollar has a boomer
13.2.23 The sell-off in the global bond market extended on Friday, with US Treasuries up 4-8bps across the curve. For currencies, CAD outperformed following a boomer employment report, JPY was volatile after reports of a surprise new appointment for the new Governor role but with little net movement by the end of the day, and the NZD closed the week just over 0.63, says Jason Wong at BNZ Markets. The domestic rates market capped off the week with another decent rise in yields across the curve....
Resistance for Kiwi, NZ rates rise
10.2.23 (7.28am) It’s been a slow news day, but US curve flattening pressure remains, seeing a new extreme of Treasuries 2s10s curve inversion, as investors converge to the Fed’s way of thinking. A weaker US dollar saw the NZ dollar trade just under 0.6390, but a reversal sees it back near 0.6340, says BNZ Markets. “It’s been a slow news day, but US curve flattening pressure remains, seeing a new extreme of Treasuries 2s10s curve inversion, as investors converge to the Fed’s way of thinking,”...
Kiwi dollar nudges upwards
Rates have oscillated, while currency movements have been well contained, says BNZ Markets this morning. US equities are generally lower as hawkish central bank speak continues. BNZ economist Doug Steel says there was not a lot of new news, “but central bank speakers continue to holler their hawkish messages. “The S&P500 is down around 0.9%, while the NASDAQ is off 1.3%. European bourses were generally stronger supported by slew of positive earnings updates. The Stoxx 600 closed up 0.3%....
