Money Market

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...

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Reserve Bank tops up cash rate

The Monetary Policy Committee today did exactly what the market had expected and increased the Official Cash Rate (OCR) to 2.0%. The Committee agreed it remains appropriate to continue to tighten monetary conditions at pace to maintain price stability and support maximum sustainable employment. The Committee is resolute in its commitment to ensure consumer price inflation returns to within the 1 to 3% target range. Consistent with the economic outlook and risks ahead, monetary conditions need...

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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...

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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...

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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...

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Bond offer upcoming

19.5.22 Infratil Ltd is considering making an offer of 8 year unsecured, unsubordinated, resettable fixed rate infrastructure bonds (2030 Bonds) to New Zealand institutional and retail investors. It is expected that the interest rate on the 2030 Bonds will be fixed for the first four years and then reset on a fixed basis in June 2026 for a further period of four years. The offer will likely comprise two separate parts: A “Firm Offer” expected to open on 26.5.22 which will be available to New...

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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...

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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...

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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...

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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...

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