Money Market

Sentiment shifts in monetary stance

3.2.23 The prevailing narrative so far this year that lower inflation will soon see an end to the global policy tightening cycle got an extra kicker over the past 24 hours, following the policy meetings of the Fed, BoE and ECB, says BNZ Markets. Jason Wong, senior market strategist comments, “All three central banks gave nothing to fear about that narrative and the fear of missing out on the rally has given further impetus towards lower rates and higher equity markets, with some significant...

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US Fed funds rate goes higher

With a goal of eventually knocking US inflation down to 2%, the US Federal Reserve FOMC this morning bumped the Federal funds rate up 50 basis points. The FOMC released the decision which notes, “Recent indicators point to modest growth in spending and production. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation has eased somewhat but remains elevated. “Russia's war against Ukraine is causing tremendous human and economic hardship and is...

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Kiwi underperforms after labour data

2.2.23 Some key releases overnight were mixed ahead of the Fed’s policy announcement this morning and ECB meeting tonight, keeping investors on edge, although market movements have been modest, says BNZ Markets. US equities are slightly weaker, the US 10-year rate has fallen to just under 3.5% and the USD is slightly weaker. “The NZD has underperformed over the past 24 hours, as NZ labour market data were on the softer side of expectations, leading to a paring of RBNZ rate hike expectations,”...

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Data flow helps risk appetite

Risk appetite improved a bit overnight with more signs US wage growth is slowing, says BNZ Markets Equity markets are higher, the USD is a touch lower after paring earlier gains. US yields are a touch lower. The US Employment Cost Index showed wage inflation slowed a touch more than expected to 1.0% q/q in Q4. It was 1.2% in Q3. “This confirms other indications that US wage growth has peaked and is slowing,” says Doug Steel. “More encouraging signs for the Fed that it is starting to get on top...

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Risk appetite soured by Spain’s CPI

Risk appetite has soured a little overnight, ahead of a massive week filled with key economic data, policy meetings and earnings reports, notes BNZ Markets this morning. “Unexpectedly strong Spanish inflation data haven’t helped the mood, driving global rates higher,” says Jason Wong, senior markets strategist. Currency moves have been modest and the NZD remains stuck just below the 0.65 mark. “With the end of January approaching there has been a modest reversal of pricing seen so far this...

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Currency markets steady

30.1.23   On Friday there were only small changes in equities, rates and currencies, ahead of a very busy event calendar in the week ahead, notes BNZ Markets. The US S&P500 was up 0.25% on Friday, taking its weekly gain to 2.5% while the Nasdaq index rose just under 1% for a weekly gain of 4.3%, the latter supported by some support for tech stocks and Tesla’s 33% gain over the week, with the company delivering on an anticipated strong result. Jason Wong, senior markets strategist...

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Kiwi dollar eases and AUD adds

The NZ dollar pushed a touch lower overnight extending yesterday’s mild underperformance. BNZ Markets’ senior market strategist Jason Wong commented, “NZD took a look at 0.6450 and opens this morning around 0.6470. AUD added more than 1% after the AU CPI, but gave up some gains overnight as last August’s high started to come into view. NZD/AUD retreated around 1% during yesterday to around 0.9140 from 0.9230 pre the data, reflecting the opposite movements in NZ and AU interest rates on the...

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Inflation under expectations …just

25.1.23 While inflation remained strong in December, it has fallen short of the RBNZ’s expectations. As a result, Westpac now expect a lower peak in the Official Cash Rate. The Consumers Price Index rose 1.4% in the December quarter. That left the annual inflation rate at 7.2%, just slightly below the 32-year high that was reached in June. December quarter inflation was boosted by unusually large increases in some specific prices, with food prices up a massive 11% and large increases in both...

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Kiwi dollar range-bound

The 3.55% level for the US 10 year proved a step too far and brought out buyers, with the bond currently down 2bps for the day, notes BNZ Markets. Currency moves have been modest, with the NZD is tracking close to 0.65. US equities are slightly weaker after the big lift over the past couple of sessions. Jason Wong, senior markets strategist comments, “A glance of the WSJ’s front page website conveys a sense of stagflation – an article reporting that employers are shedding temporary workers at...

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Euro reaches 9-month high

Newsflow has been light to start the new week but the move higher in equities and bond rates seen Friday night has been extended, BNZ Markets says this morning. “The S&P500 is currently up 1¼% adding to the near-2% gain on Friday, seeing the index trade back above the key 200-moving average, a level it has breached but failed to sustainably break above over recent months,” notes Jason Wong, senior markets strategist. “Investors are seemingly encouraged by the recent downdraft in inflation...

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