Surprise for markets from Reserve Bank
The RBNZ sprung a hawkish surprise at the MPS yesterday, significantly revising up its forecast OCR track to show a peak of just under 4%, notes BNZ Markets. NZ rates moved sharply higher as a result, with the market moving to broadly align itself with the RBNZ’s new projections, while the NZD/AUD cross has reached a four-week high, says Nick Smyth. “ It’s been a quieter night in global markets. “Equity markets are generally higher, helped by the release of the FOMC minutes which hinted at a...
Reversal in risk sentiment
After a positive start to the week, risk sentiment is weaker again on the back of concerns about the earnings and growth outlook, says BNZ Markets this morning. This sees weaker global equities and global rates lower, says Jason Wong, senior market strategist. “Currency movements reflect the dataflow and sentiment, with GBP dragged down on a very weak PMI reading. EUR has been supported by some hawkish commentary from a couple of ECB GC members. The USD has been pulled in opposing directions,...
Sentiment shift supports NZ dollar
The new week has kicked off with a lift in risk appetite, with global equities markets showing some decent gains, higher global rates and weaker safe-haven currencies like JPY and the USD. The NZ dollar has been a beneficiary of the change in sentiment, gaining 1% to 0.6460 during local trading hours and little net gain overnight, says Jason Wong at BNZ Markets. After seven consecutive weekly falls in the S&P500, the new week has begun on a positive note, with the index currently up just...
Stagflation fears hang over markets
23.5.22 Markets remain dominated by stagflation concerns at present, with inflation at multi-decade highs in most countries, central banks set on rapidly tightening monetary policy, and recession fears mounting, notes BNZ Markets. The S&P500 briefly crossed over into bear market territory on Friday, fanning recession fears, before recovering late in the session to end unchanged. Despite the late recovery, risk appetite remains very cautious, and investors remain concerned about the outlook...
Weakness in US dollar
20.5.22 Growth fears for the US economy have resulted in notable weakness in the US dollar, comments BNZ Markets. US rates have pushed lower, led by the short-end of the curve, as traders pare bare monetary policy tightening expectations a little, notes Jason Wong, senior market strategist. The NZ dollar has traded back up to 0.64. “Risk sentiment remains on the soft side, with the VIX index hovering around the 30 mark and after the plunge in US equities yesterday there has been no big...
US retail data drops markets
19.5.22 US equities have plunged as some poor earnings results from the retailers provide a reality check on how damaging a high inflationary environment can be, says BNZ Markets. Bonds have found a safe-haven bid and so have JPY, CHF. The USD has also been well supported, comments Jason Wong, senior markets strategist. The NZD has fallen back down towards 0.63, but GBP has been the worst performing following another strong inflation report. The notable lift in risk sentiment yesterday has...
Better US data helps markets
18.6.22 Risk appetite has recovered as investors eye up easing lockdown restriction in China and some stronger economic data have supported the positive mood, says BNZ Markets. “Central bank speak has remained hawkish, but not enough to prevent equity markets from rallying. Global rates are much higher and European currencies have been the best performing,” says senior market strategist Jason Wong. “Risk appetite improved during Asian trading yesterday after Shanghai recorded its third...
Topsy Turvy on markets
Some poor China economic data set the scene for a risk-off vibe to start the new week, with weaker US equity markets, lower global rates and the NZD weakening towards 0.62 before a significant turnaround overnight ensued, notes BNZ Markets. The US S&P500 now shows a modest gain and the NZD has recovered strongly to break up through 0.63, senior market strategist Jason Wong said earlier today. “April monthly activity data for China were much worse than the market estimated, with lockdowns...
Markets firm up at weekend
Risk assets ended last week on a positive note, with equities rebounding strongly on Friday from their heavy falls earlier in the week. News that Shanghai was planning to start removing restrictions this week was taken positively by the market although the rebound was likely as much to do with a correction from oversold levels as a change in investors’ economic outlook., says Nick Smyth at BNZ Markets. “Global rates and commodity currencies rebounded as well, with the NZD ending the week back...
Euro plunges, Kiwi down, on recession fears
13.5.22 Markets remain firmly in risk-off mode as concerns grow that the global economy is heading towards a recession, notes BNZ Markets this morning. “The unfolding energy crisis in Europe, concerns that Beijing could be plunged into lockdown at any point, and expectations of aggressive rate hikes from central banks are all weighing on sentiment,” says Nick Smyth at BNZ Markets. “Equity markets continue to tumble, with the S&P500 down another 1.8% overnight, to now be on cusp of a bear...
New US inflation data hurts markets
Risk sentiment soured after the US CPI report showed stronger than expected inflationary pressure, driving the S&P500 down to a fresh low, notes BNZ Market. “The US yield curve has flattened, with higher short rates and lower long-term rates,” says Jason Wong, senior markets strategist. “The yen has been well supported against the backdrop of a lower US 10-year rate, while GBP is weaker as Brexit headlines return to the front pages. “The NZD has traded a full 1-cent range in the aftermath...
Turnaround in equities; currency weak
1.5.22 There has been something of a turnaround in risk sentiment overnight, with equities bouncing back from their recent heavy falls, notes BNZ Markets. Long-term global rates have fallen amidst lower market-implied inflation expectations, with US 10-year rate back below the 3% mark and the German 10-year rate below 1%, says Nick Smyth. The improvement in risk sentiment hasn’t done much to help the NZD however, which has hit a fresh year-to-date low below 63 cents. “Beaten up tech stocks...
Markets tumble catches Kiwi dollar
Global equities and industrial commodities continue to tumble on rising global growth concerns, with heavy losses seen across all the major equity indices overnight, notes BNZ Markets this morning “The CNY has continued its recent sharp downtrend while the NZD and AUD have fallen more than 1%, with both hitting fresh lows for the year,” comments Nick Smyth. “US Treasury rates have fallen back amidst the risk-off backdrop, although the 10-year rate continues to trade above 3%. “There hasn’t...
Kiwi dollar under pressure
9.5.22 Equities, base metals and commodity currencies remain under downward pressure on growing concerns around the global growth outlook, the NZ dollar ending the week just above the 0.64 mark, says BNZ Markets. US and German 10-year rates surged to fresh cycle highs on Friday amidst continued hawkish rhetoric from the Fed and ECB. The nonfarm payrolls report suggested the pace of US wage growth may be easing although this is highly unlikely to prevent another 50bps Fed rate hike next month....
Rethink brings risk aversion in market reversal
6.5.22 The post-FOMC rally in risk assets and bonds didn’t even last 24 hours, with markets seeing a massive reversal overnight as stagflationary fears dominate. The US 10-year rate has made a new cycle high of 3.11% and is currently 12bps higher on the day, while the USD has hit a fresh 20-year high. Equities have crumbled as rates have taken off, with the NASDAQ currently down over 5% and the S&P500 more than 4% lower. The NZD and AUD are down by more than 2% amidst a broad-based...
Fed rate rises, USD weakens
5.5.22. There was no surprise in the Fed’s 50bps hike, plans for further hikes, or plans for quantitative tightening, says BNZ Markets this morning. But the market has reacted to Chair Jerome Powell’s comment that seemed to rule out hike steps of 75bps, comments Jason Wong, senior market strategist. The US yield curve has steepened on that, with a large fall in the 2-year rate, while the 10-year rate is down 6bps to 2.91%. “The US dollar has broadly weakened, seeing the NZ dollar back...
Aussie up, Kiwi down, dairy dip
4.5.22 US equity markets remain choppy and currently show a modest gain, following a strong late rally yesterday. The US 10-year rate has pushed slightly lower after returning to the 3% mark. The AUD has been the best major since this time yesterday, although the net gain came ahead of a hawkish policy update alongside the RBA’s first rate hike this cycle, says Jason Wong at BNZ Markets. The NZD hit a fresh near 2-year low last night, but now shows a small gain from his time yesterday, while...
Fresh low for Kiwi Dollar
3.5.22 By recent standards it has been a quiet trading session with little news, with the UK and some key Asian markets on holiday, says BNZ Markets. “But the new month has begun with the same trends as we saw through April – weaker equities, higher rates and a stronger USD,” says Jason Wong, senior markets strategist. “The NZD has traded at a fresh near 2-year low. The US 10-year Treasury rate cracked the 3% mark for the first time this cycle. “After a horrible April for bonds, equities and...
Market attention on US Fed this week
2.5.22 Global rates moved sharply higher again on Friday, following upside surprises to US wage data and European core inflation. The Fed is almost universally expected to raise its cash rate by 50bps this week, but the market has moved to price an almost 50% chance of a 75bps hike (!) in June, says Nick Smyth at BNZ Markets. “The prospect of aggressive central bank tightening and underwhelming earnings outlooks from Amazon and Apple saw the S&P500 and NASDAQ plunge by around 4%, capping...
Sharp drop for yen
29.4.22 The main story over the past 24 hours has been the sharp weakening in the JPY, with USD/JPY blowing through 130 overnight after the BoJ stood firm on its commitment to cap Japanese rates under its Yield Curve Control policy, says BNZ Markets “The USD has continued its recent strong run, with the DXY index reaching a 20-year high overnight, seeing the NZD fall below 0.65,” says Nick Smyth. “Equity markets have rebounded strongly overnight, with the S&P500 up by more than 2%, helped...
US dollar on the front foot
28.4.22 There has been some recovery in risk appetite overnight, with equities rebounding from yesterday’s heavy falls and the US 10-year rate bouncing back to 2.82%, according to BNZ Markets. “However, the USD remains firmly on the front foot, with the DXY index briefly surpassing its early-2020 highs and hitting its highest level in five years," says Nick Smyth. “USD strength partly reflects weakness in the EUR, which remains under pressure amidst an intensifying energy crisis on the...
Markets in descent
27.4.22 It’s been another ‘risk-off’ session across markets overnight on growing concerns around the global growth outlook, says BNZ Markets. “Equities and bond yields have fallen sharply while the USD and JPY have appreciated,” noytes Nick Smyth this morning. “The NZD has dropped below 0.66 amidst broad-based USD strength and mounting risk aversion. “Market sentiment remains fragile amidst expectations for aggressive monetary policy tightening this year and concerns that Beijing could join...
Kiwi dollar pressed lower
It has been an ostensibly risk-off environment since we left for the long weekend, with a chunky fall in global equity markets and the VIX index piercing 30, said BNZ Markets earlier today. Fears of how a front-loaded Fed tightening cycle might play out and China’s zero-COVID strategy resulting in further lockdowns and likely supply chain issues have been in focus, said Jason Wong, senior markets strategist. The combination of a risk-off move and significant downward pressure on the yuan saw...
Lots of central bank chat
22.4.22 There has been plenty of central bank-speak since the NZ close and more hawkish commentary out of Europe has seen a front end-led sell-off in global bond markets, says BNZ Markets. European 10-year rates are up 7-10bps, with 2-year rates up near 15bps. The US 10-year rate revisited 2.95% and is currently up 8bps for the day to 2.92%. “Weaker risk appetite has seen commodity currencies underperform, with the NZD and AUD down in the order of 0.9% overnight,” said Jason Wong, senior...
Bonds trend higher, currencies hunker down
20.4.22 Global rates continue their relentless trend higher. The US 10-year rate is closing in on 3% while the 10-year real yield approaching 0%. “As US rates march higher, USD/JPY continues to explode to the upside, with the currency pair hitting a fresh 20-year high of around 128.90 overnight,” says Nick Smyth at BNZ Markets. “Movements in other currencies have been more restrained and the NZD has consolidated above 0.6720 overnight. Meanwhile, US equity markets have rebounded from their...
Global sell-off in bonds is back
The great global bond sell-off has resumed over the long weekend, with the US 10-year rate hitting a fresh cycle high of 2.88%, noted BNZ Markets today. NY Fed President Williams has cemented expectations for a 50bps hike next month by saying such a move was “a very reasonable option ” while oil prices have increased sharply on supply concerns, adding to inflationary concerns and boosting bond yields. “The USD is broadly stronger against a backdrop of higher Fed rate hike expectations and...
NZ dollar drops after OCR change
14.4.22 Global rates have shown further signs of stabilising overnight on hopes that inflation may be close to peaking, notes BNZ Markets. The US 10-year Treasury rate has fallen to around 2.68%, helping to boost equity markets and driving a fall in the USD, says Nick Smyth “Both the RBNZ and Bank of Canada have delivered 50bps rate hikes over the past 24 hours. Despite the 50bps hike, the RBNZ’s statement was seen as ‘dovish’ relative to very elevated market expectations and NZ rates and the...
Commodity currencies reverse upwards
13.4.22 It’s been another volatile trading session overnight. US rates have fallen sharply after US core CPI surprised to the downside, notes BNZ Markets. The US 10-year rate is back to 2.72%, having traded as high as 2.83% yesterday afternoon, says Nick Smyth at BNZ Markets. After opening higher, US equities are now lower on the day, despite speculation China could start easing lockdown restrictions. The NZD and AUD are stronger on the back of higher commodity prices. The RBNZ MPR takes...
Commodity currencies struggle
Risk appetite is weaker as investors focus on increasing lockdowns in China and the relentless rise in longer term bond rates, BNZ Markets noted this morning. Global equities are weaker and global 10-year rates have risen to fresh multi-year highs, says Jason Wong, senior markets strategist. “Oil prices have fallen back below US$100 on weaker demand fears from China lockdowns, amid ongoing supply from Russia. Against that backdrop, commodity currencies and JPY have underperformed. The new week...
Bond market sell-off sustained
11.4.22 Newsflow was light on Friday but the great global bond market selloff continued, with the US 10-year rate reaching a fresh three-year high of 2.73%, notes BNZ Markets this morning. The USD reached its highest level in nearly two years before ending the day flat, says Jason Wong, senior markets strategist. Against a backdrop of slightly weaker risk appetite, the NZD was the worst performer on Friday, down 0.6% for the day to just under 0.6850. “The week ahead is a busy one, with policy...
