BNZ Research

NZD Corporate FX Update

The NZD remains out of favour, with a clear downward trajectory evident throughout the second half of the year. We attribute much of this decline to domestic factors, particularly the elusive NZ economic recovery and the prolonged monetary policy easing cycle.

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Wings clipped on Kiwi

Global and domestic forces have driven the NZD down to fresh lows, demanding a revision to our projections. We pare back the extent of projected US dollar decline against all the majors, while NZD crosses include the impact of the now well-acknowledged disappointing recent NZ macro performance.

Our new year-end target for NZD/USD is 0.59. From a current depressed level, we still see a clear pathway for a positive medium-term trajectory, although next year’s target has been cut to 0.63.

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NZD/AUD: Crikey mate, check this out

The NZD/AUD cross rate has been plunging of late, driven down by collapsing NZ-Australia rate spreads. Earlier this year we noted our short/medium-term model estimates were sitting around 0.85. Those model estimates now sit around 0.83-0.84. Based on fundamental forces, the recent plunge in the cross rate to below 0.88 has been fully justified.

Risks to the outlook are two-sided. There are strong reasons for the cross rate to trade lower, including downside momentum, lower fair value estimates, and the likelihood of RBNZ rate cuts. Risks remain that the cross rate could break decade-lows, with little technical support below 0.87.

However, a potential recovery could come if the RBNZ is less aggressive with cuts and forthcoming NZ data improves. While downside risks to forecasts exist, longer-term investors may see value at current levels. Based on the negative interest rate spread between NZ and Australia being sustained, the near-term headwinds for the cross rate remain formidable.

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GDP volatility reigns

Today’s GDP outturn delivered what it promised, namely more noise than signal.

Over the last five quarters, starting Q3 2024, the economy has allegedly plummeted 1.3%, stalled at 0.1%, soared 1.1%, crashed 1.0% and soared again in Q3 2025 this time by 1.1%. Does anyone feel this is a true reflection of what happened to them? And do we really think we are currently growing at the same pace as China (1.1% for Q3) and three times that of Australia (0.4% for the quarter)?

Deficit narrowing continues, for now

The current account deficit narrowed to 3.5% of GDP in the year to September 2025. It was a tick wider than our forecast of 3.4%, but smaller than the 3.7% annual deficit recorded in June and extends a material narrowing over the past three years.

Fiscal surplus still a distant dream

Key numbers

The core fiscal deficit (OBEGALx) is forecast to rise to a six year high of 3.0% of GDP in the June year 2026.

It is forecast to decline steadily the following three years before returning to a 0.4% of GDP surplus in Fiscal 2030.

Net debt rises from 41.8% of GDP in the year ended June 2025 to a peak of 46.9% in Fiscal 2028. It edges lower to 46.1% of GDP in Fiscal 2030.

The economy is forecast to grow 2.0% in the year ended June 2026 and then bounce 3.5% the year after. Growth is expected to average 2.6% per annum in the three years thereafter.

Familiar themes in monthly inflation indicators

Our main interest in today’s November Selected Prices was if they had any material influence of our thoughts for near term CPI. In short, they didn’t.

There were some unders and overs in the details, but overall, the monthly indicators were in line with our expectations.

Dare to believe?

SEEK job ads continue to show positive signs, trending upwards off a low base. It is encouraging to see five consecutive months of improvement (seasonally adjusted). Job ads for the last three months (Sep – Nov) are now up 3.9% on the previous three months (Jun – Aug).

Same Story

The services sector in New Zealand dipped further into contraction during November, according to the BNZ – BusinessNZ Performance of Services Index (PSI).

The PSI for November was 46.9 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). This was 1.5 points lower than October, and the lowest level of activity since May 2025. The November result was also still well below the average of 52.8 over the history of the survey.

BusinessNZ's CEO, Katherine Rich said that the November result put to bed any immediate hope that the sector was heading somewhere towards expansion. All five sub-index values were in contraction, with Activity/Sales (45.8) experiencing the greatest level of contraction for the current month. While New Orders/Business (49.3) still hovered just below the no change mark, Employment (46.4) also took a dip from October.

Despite a stronger level of contraction during November, the proportion of negative comments for November (52.9%) was lower than October (54.1%) and September (58.0%). Negative comments received show the services sector overwhelmingly citing the weak economic environment, including low consumer confidence, high living costs, inflation, interest rates, and reduced spending, as the main factors affecting recent activity.

BNZ's Senior Economist Doug Steel said that "combined with the Performance of Manufacturing Index (PMI), the composite activity indicator poses downside risk to even modest growth expectations for early next year".

Continued Gains

New Zealand’s manufacturing sector showed further expansion during November, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for November was 51.4 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was 0.2 points higher than October, but still below the average of 52.4 since the survey began.

BusinessNZ’s Director of Advocacy, Catherine Beard, said that in the current economic climate, any move that sees activity both positive and higher than the previous month is a welcome step.

"Four of the five sub-index values were in expansion during November, lead by production (52.8). Employment (52.4) was in positive territory for the first time since April 2025, while New Orders (51.9) remained in expansion, albeit down from last month. In contrast, Deliveries (49.0) fell into contraction for the first time since June 2025.

The proportion of negative comments from respondents stood at 45.6% for November, down from 54.1% in October and 60.2% in September.

Manufacturers reported a lift in demand driven by seasonal Christmas activity, improving economic conditions and rising customer confidence. Increased orders, both domestic and overseas, along with stronger construction activity, new customers, and product launches contributed to a more positive outlook.

BNZ’s Senior Economist Doug Steel said that "the PMI has seemingly settled above the breakeven 50 mark. Nonetheless, we want to see more upbeat outturns from this survey and the Performance of Services Index (due Monday), to provide us with some comfort that the expected lift in Q3 GDP can be sustained into Q4".

GDP to show decent bounce

We have been warning of upside risk to Q3 GDP calculations for some time. Today’s business financial and energy data firmly add to that idea. Q3 GDP data is release next Thursday, 18 December.

Our estimate for Q3 GDP growth has been lifted to 0.9% q/q (from 0.6%) after trawling through today’s manufacturing, wholesale trade, energy, and services data.

Retail rips, businesses optimistic

Today’s economic data support our view that NZ’s economic recovery is well underway. After a lengthy period of weakness any pickup in activity will take time before it feels better, but evidence of a decent improvement is accumulating.

Trending slowly upward

SEEK job ads have maintained an upwards trend over the three months to October. There is a hint that the pace of improvement has slowed a touch over recent months, but headway has been made. October job ads are 6.7% higher than a year ago. It’s slow progress off a low base with jobs ads still 46.4% below their 2022 peak.

RBNZ slices 25bps off OCR, signals done easing

We thought the RBNZ would cut its cash rate 25 basis points today, leave the door open to further easing next year, while setting a significant hurdle for further action. That is exactly what the Bank delivered today as it cut its Official Cash Rate (OCR) 25 basis points, to 2.25%.

Ongoing Downturn Persists

The services sector in New Zealand continues to exhibit contraction, according to the BNZ – BusinessNZ Performance of Services Index (PSI).

The PSI for October was 48.7 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). Although this was 0.4 points higher than September, the sector remains entrenched in contraction, which has now been the case for 20 consecutive months. The October result was also still well below the average of 52.8 over the history of the survey.

BusinessNZ's CEO, Katherine Rich said that while the level of activity in the sector has risen for the second consecutive month, the fact that none of the sub-index results managed to get above 50.0 during October shows it is still tough times for service-based businesses. For the sub-index results, ^ctivity/Sales (48.9) recorded its highest value since January 2025, although New Orders/Business (49.5) slipped slightly from September. In addition, Employment (48.8) rose 0.9 points from September, recording its highest value since March 2025.

The proportion of negative comments for October (54.1%) was down from September (58.0%) and August (59.6%). Negative comments received show the services sector reporting weak demand and reduced customer spending due to the economic downturn, cost-of-living pressures, and low confidence. Rising operating costs, delays, competition, and project cancellations are further reducing sales, slowing activity, and creating cashflow challenges.

BNZ's Senior Economist Doug Steel said that "if one was trying to find any positive traces in a still broadly weak sector, the activity/sales index rose to its best outcome since January this year and its second-best month since February last year. But 48.9 is not strong".

Signs of life

New Zealand’s manufacturing sector showed increased expansion during October, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for October was 51.4 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was 1.3 points higher than September, but still below the average of 52.4 since the survey began.

BusinessNZ’s Director of Advocacy, Catherine Beard, said that after two months of flatlining activity in the sector, at least October showed more signs of life.
"Four of the five sub-index values were in expansion during October, lead by kew Orders (54.9), which showed its highest level of expansion since August 2022. This was followed by Production (52.0) and Finished Stocks (51.3). In contrast, Employment (48.1) remained in contraction, which has now been the case for six consecutive months".

The proportion of negative comments from respondents stood at 54.1% for October, down from 60.2% in September and 58.1% in August.
Manufacturers reported a lift in orders and improved demand, helped by seasonal activity, new customers/products, and signs of economic confidence returning. Many also noted better efficiency and productivity, with process improvements and automation supporting stronger sales and output.

BNZ’s Senior Economist Doug Steel said that "the lift to 51.4 from September’s 50.1 isn’t large, but it has moved the right way. The October result sees the PMI now boasting four consecutive months above the breakeven 50 mark for the second time in three years".

Another turning point?

Today’s labour market data broadly confirmed our view of the world. Namely, that the deterioration in the labour market is reaching its end but that it will be quite some time before any sort of buoyancy returns.

The problem for those looking for work is that the labour market lags the real economy. Only now is the economy starting to show the first signs of life. But it will be a while before employers are confident enough to take on more staff especially, when in many cases, the staff that are already employed are underutilised.

Business optimism elevated

ANZ’s business opinion survey continues to foretell a marked improvement in economic activity. It’s been doing so for over a year now. We are comfortable with our view that activity will soon turn the corner but we can’t help but think the initial pace of the expansion will disappoint many. Consistent with the ANZ survey, we do believe annual GDP growth can climb to around 3.0% but that’s likely to be towards the tail end of 2026 rather than any time soon.

Shaking off the sideways trend

SEEK job ads are showing further signs of life. Across the September quarter, ads lifted 2.8% q/q. With each passing month, an upturn in the trend becomes more compelling. It is important to remember that the level of job ads is still almost 50% below the 2022 peak. But it is another sign the worst for employment may be behind us.

Annual CPI expected to peak in Q3

Broadly speaking, today’s selected prices for September support our view that annual CPI peaked in Q3 and will ease in Q4. The monthly prices were a touch on the softer side relative to our priors and set a lower base going into Q4. It provides early evidence that the current bout of inflation is slowly starting to unwind. This should help ease some concerns around inflation persistence, with RBNZ Chief Economist Conway noting yesterday it is nerve wracking with CPI close to the top of the target band.

Headwinds Continue

The services sector in New Zealand remains mired in contraction, according to the BNZ – BusinessNZ Performance of Services Index (PSI).

The PSI for September was 48.3 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). While this was 0.7 points higher than August, the sector has now been in ongoing contraction for 19 consecutive months. The September result was also still well below the average of 52.9 over the history of the survey.

BusinessNZ's CEO, Katherine Rich said that it was a case of a different month but the same story for the sector. For the sub-index results, Activity/Sales (47.8) and New Orders/Business (49.6) did pick up from August, but still remained in contraction. Employment (47.8) experienced increased contraction, while Stocks (50.6) was the only sub-index to show expansion during September.

The proportion of negative comments for September (58.0%) was down on August (59.6%) and July (58.5%). Negative comments received show that the services sector continues to struggle under weak economic conditions, with low consumer confidence, reduced discretionary spending, and high living costs curbing demand. Businesses report falling sales, fewer new contracts, and cautious clients delaying projects amid rising costs and ongoing uncertainty about the broader economy.

BNZ's Senior Economist Doug Steel said that "in isolation, the combined PMI/PSI activity indicator warns of economic growth struggling to gain traction".

Hovering below expansion

New Zealand’s manufacturing sector again remained just below expansion levels for September, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for September was 49.9 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was exactly the same result as August but below the average of 52.4 since the survey began.

BusinessNZ’s Director of Advocacy, Catherine Beard, said that while it was good to see the September result not showing increased contraction from August, the sector remains agonizingly close to returning to expansion mode.

"Despite the sector remaining in technical contraction, four of the five main sub-index values were in expansion during September. This was led by deliveries of Raw Materials (51.1), followed by Finished Stocks (50.4) and New Orders (50.3). Production (50.1) managed to keep its head above water, but Employment (47.5) was the primary reason for the September PMI result not being able to advance to expansion".

The proportion of negative comments from respondents stood at 60.2% in September, compared with 58.1% in August and 58.6% in July.
Manufacturers continue to report soft demand, with many noting lower order volumes, cautious customer spending, and ongoing uncertainty across domestic and export markets. Rising costs, weak confidence, and competitive pressures are squeezing margins, leaving many manufacturers in a holding pattern as they wait for clearer signs of recovery.

BNZ’s Senior Economist Doug Steel said that "the lack of improvement in the PMI risks a slower recovery than we have penciled in. Improvement is needed to be consistent with the pace of growth we forecast for the second half of this year".

RBNZ cuts OCR to 2.50%

For more than a year we have been forecasting the Official Cash Rate (OCR) to go below 3% by the end of 2025. It now is, with the RBNZ cutting the OCR by 50bps to 2.50% today.

QSBO supports lower rates, mixed signals on how far

For those that are inclined to think the economy needs the RBNZ to lower rates, the QSBO does not stand in the way of that view. But on the extent of the reduction required, there were mixed messages. It doesn’t make the RBNZ’s decision tomorrow easy.

An uneventful close to 2025

• Market price action over the first three weeks of December was modest, with a lack of key drivers to perturb investors
• The bias to global rates was to the upside on a view of maturing rate cutting cycles
• The USD was broadly weaker; NZD/USD showed a small gain and NZD cross movements were also small

November a net nothingburger

• Markets were well contained in November, with little net change across global equities, rates and currencies
• The NZD hit fresh lows during the month, before recovering after a more hawkish RBNZ policy update than widely expected
• Higher conviction on the end of easing cycles saw both NZ and Australian rates higher, against the global trend

Mixed NZD performance in October

• A dovish 50bp cut by the RBNZ caused only temporary NZD weakness in October
• The USD was broadly stronger, and NZD/USD fell just over 1%; the NZD recovered from a mid-month malaise and ended mixed on the key crosses
• JPY underperformed on political uncertainty and the BoJ remaining on the sidelines; NZD/JPY rose 3%

Roasted Kiwi

• For a second consecutive month, the NZD was a clear underperformer, struggling after a poor Q2 GDP outturn
• By month-end, the market had priced in the OCR falling just below 2.25%, implying at least another 75bps of cuts
• NZD/USD fell 1.7%, with the NZD showing even larger falls on NZD/AUD and NZD/EUR crosses, to multi-year lows

Post-HYEFU NZGB Supply Update

New Zealand Debt Management (NZDM) updated the bond programme today, alongside the Half Year Economic and Fiscal Update (HYEFU). Gross NZ Government Bond (NZGB) issuance has been increased by a total of NZ$3 billion over the forecast period to June 2029, compared with the Budget Economic and Fiscal Update (BEFU) in May. The 2029/30 year has been added, and gross issuance for that year is forecast to be NZ$30 billion.

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Outlook for Borrowers: Post November MPS

The Reserve Bank of New Zealand (RBNZ) reduced the Official Cash Rate (OCR) by 25bp to 2.25% at the Monetary Policy Statement (MPS) on Wednesday. The rate cut was widely expected by analysts. Market pricing implied a small chance of a larger cut following the surprising 50bp move in October. The decision was reached by 5-1 majority. The dissenter preferred to leave rates on hold, which was the alternative option discussed by the Committee. This was Governor Hawkesby’s final meeting with Dr Anna Breman beginning her term on 1 December.

NZGB May-2036 tap syndication before year end

At the Budget in May, New Zealand Debt Management (NZDM) announced it expected to undertake three tap syndications of nominal lines in 2025/26. A NZ$6 billion tap of the May-2031 maturity took place in July. It was announced in the Monthly Tender Schedule this morning that a syndicated tap of the existing 15 May 2036 nominal bond will be undertaken before calendar year end. We expect the transaction will take place in November.

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The Pre-Christmas Blockbuster

It is the usual massive pre-Christmas rush of economic information this week. Q3 GDP is expected to show a decent lift but is likely to overstate trend improvement. PMI/PSI reveal still challenging conditions for many. The Government’s HYEFU to show a long road back to surplus. Annual current account deficit still seen narrowing, for now. Selected Prices to inform our thoughts for Q4 CPI.

Welcome Dr Anna Breman!

Dr Anna Breman, the new RBNZ Governor, made an impressive debut before the Finance and Expenditure Committee last week. Governor Breman has hit the ground running. Falling dairy prices need to be watched closely, as downside risk accumulates. GDP partials this week expected to support forecast Q3 bounce. PMI, migration, and tourism data are also due.

More Signs of Economic Recovery

Some MPC members have noted they are not surprised at the market reaction to last week’s MPS. That is important because it suggests the Bank is comfortable with the market direction. New RBNZ Governor Dr Anna Breman starts today. There are more signs of economic recovery. We nudge our Q3 GDP pick up to 0.6% q/q awaiting more ‘partials’ over this week and next. Dairy prices are under downward pressure.

RBNZ to lop another 25 points off its cash rate

Local market attention will this week be centred on Wednesday’s RBNZ Monetary Policy Statement. In short, we see the RBNZ cutting its cash rate a further 25 basis points to 2.25% and leaving the door open to a further reduction in February next year. Q3 retail sales, updates on business and consumer confidence, and October filled jobs are the key data releases but are all scheduled post the RBNZ meeting.

RBNZ November MPS Preview

Our central view is the Reserve Bank cuts the cash rate a further 25 basis points to 2.25% when it presents its November 26 Monetary Policy Statement (MPS). Moreover, we expect the Bank to leave the door open to a further reduction in February next year.

Monitoring progress

Forward looking indicators have been promising some improvement in activity. We will be monitoring the coming week’s data for more signs of the promise translating into actual activity. The NZD has pushed further below RBNZ assumptions raising questions around how fast and far inflation will ease ahead. Inflation expectations data is due for release tomorrow.

Labour market soft, but more signs of life appearing

Wednesday’s Q3 labour market data are expected to show a soft labour market, but with some signs of stabilisation. More monthly economic indicators are showing signs of life supporting our expectation of economic recovery. The RBNZ releases its Financial Stability Report on Wednesday, and the latest Crown accounts are due Thursday.

Q3 Labour Market Preview

We expect next Wednesday’s Q3 labour market data to show a soft labour market, but with some signs of stabilisation. We anticipate minimal employment growth, a nudge higher in the unemployment rate, and easing annual wage inflation. Business and consumer confidence updates are due this week and a few RBNZ speakers are on the circuit.

Inflation at top of the band

Today’s Q3 CPI data came in very close to expectations. It is unlikely to change any views on the outlook for monetary policy. Annual inflation rose to 3.0% from 2.7%, matching market, our, and the RBNZ forecasts. The quarterly details were marginally firmer than expected, but no major surprise. Core inflation is contained, although indicators remain in the top half of the RBNZ’s target band.

Trade tension, growth struggles, and CPI preview

Trade tensions between the US and China have flared again. Locally, the PMI and PSI warn that economic growth is struggling to gain traction. Population growth is slow, reflecting low net inward migration. The 2024/25 fiscal deficit came in narrower than Budget forecasts and Government net debt stabilised as a share of the economy. Q3 CPI seen lifting to 3.0%, subject to this week’s Selected Price Indexes for September. RBNZ’s Conway speaks on Wednesday.

RBNZ to cut

The RBNZ seems certain to cut the OCR at its Monetary Policy Review (MPR) on Wednesday. The question is how much? We see a 25bp cut, although a 50bp move is a clear risk. Economist polls and market pricing also favour a 25bp reduction, with some chance of a 50bp move. Tomorrow’s business survey has the potential to alter thoughts on the economy and outlook for interest rates. The Government Financial Statements for 2024/25 are to be published Thursday. The Minister of Finance speaks Friday.

BNZ Markets Today

Softer than expected US CPI data reinforced expectations for further rate cuts by the Federal Reserve and contributed to solid rally for equity markets. The S&P is more than 1% higher in afternoon trading with larger gains for the Nasdaq. Global government bond yields are broadly lower while the US dollar is little changed against the major FX pairings.

BNZ Markets Today

US equities are notably weaker, dragged down by the tech sector, but there has been limited movement in US Treasuries and currencies. The NZD has traded in a narrow range. Oil prices have recovered moderately from yesterday’s low after Trump’s blockade of sanctioned Venezuelan oil tankers.

BNZ Markets Today

Following the mass of data releases overnight the net result has been not a lot of market price action, although the direction of travel has been slightly lower US rates, a slightly weaker USD and modestly weaker US equities. Oil prices continue to head south, with WTI crude down to its lowest level in over four years. The NZD continues to linger just under the 0.58 mark.

BNZ Markets Today

Ahead of a busy week before Christmas, including the key US employment report tonight, market movements have been modest. US equities are slightly softer in early afternoon trading, global rates are flat to down slightly, and currency moves have been modest. The NZD has recovered much of the loss seen after an unexpected statement from RBNZ Governor Breman that sent interest rates lower.

BNZ Markets Today

Concerns about the outlook for artificial intelligence and technology stocks weighed on investor risk sentiment into the weekly close. A disappointing sales outlook from Broadcom fuelled investor concerns about high valuations for companies linked to the sector. The S&P fell 1% and the Nasdaq declined 1.7% while European indices also closed lower. Global government bond market yields increased and the US dollar was broadly stable against G10 currencies.

BNZ Markets Today

The rally in US equities after the Federal Reserve’s interest-rate cut has lost momentum following disappointing results from Oracle which weighed on technology shares. The Nasdaq has fallen close to 1% in afternoon trading and the S&P is also in negative territory. However, The Dow industrials index has bucked the trend, rising nearly 1% and hitting an intraday record above 48500. US treasury yields are modestly lower, and the US dollar has extended its post-FOMC decline. Copper prices reached a fresh record high and other industrial metals gained. Copper has rallied almost 35% this year with supply constrained by a series of mine disruptions.

BNZ Markets Today

Market movements have been modest in the lead-up to the US Fed’s policy announcement due at 8am NZ time. Heading into the meeting, US equities are flat, US Treasury yields are trading at the bottom of their range for the day, and the USD is broadly weaker, although moves haven’t been significant.

BNZ Markets Today

Market movements have been modest, with US equities slightly higher and little change in the US 10-year rate since the NZ close. Australian rates and the AUD increased after the RBA opened the door to tightening policy from early next year. NZD/AUD has nudged lower but NZD/USD traded at a fresh six-week high just under 0.58, while the yen continues to underperform.

BNZ Markets Today

Global rates are higher overnight, led by Europe after some hawkish commentary from the ECB’s Schnabel. Higher rates have dampened spirits for equity investors, with the S&P500 down 0.4% in early afternoon trading after meeting some resistance near October’s record high. The NZD is currently at 0.5775, after trading at a fresh six-week high overnight.

BNZ Markets Today

Net moves across risk sensitive assets were modest into the weekly close. The S&P traded up towards the late October record high above 6900 before paring its gains to end the session only marginally in positive territory. There was limited market reaction to the delayed release of the September PCE report. Global sovereign bond yields closed higher in yield, and the US dollar was stable against G10 currencies, except for the Canadian dollar, which gained after strong labour market data.

BNZ Markets Today

Market movements continue to show only modest changes in the absence of a fresh narrative to drive big moves. US equities show little net change and global rates are mostly higher. Net currency moves have been modest and the NZD is flat, hovering around 0.5775.

BNZ Markets Today

A soft ADP employment print solidified market expectations for a Fed rate cut next week, but the net move in US Treasuries overnight has been small. US equities show a small gain. The USD continues its weaker run and the NZD has pushed up to monthly highs just over 0.5770.

BNZ Markets Today

Markets movements have been modest across equities, rates and currencies.

As US markets opened overnight, risk appetite was higher, with a strong recovery in bitcoin, which has sustained a lift of 6% to be back over USD91k. US equities opened stronger, with the more speculative areas outperforming, including IT stocks. In early afternoon trading the S&P500 is up 0.4%.

BNZ Markets Today

US equities have started the new month with a soft tone. S&P futures declined during Asian trade yesterday, amid a sharp selloff in cryptocurrencies, and the cash market is marginally lower in afternoon US trading. The US dollar slipped against major FX pairings while global bond markets are higher in yield. Oil prices gained after OPEC+ confirmed over the weekend that it will continue with plans to pause production hikes during the first quarter of next year. Silver prices extended higher and reached a fresh record above US$58 per ounce.

BNZ Markets Today

US equities made modest gains into month-end with investors having to contend with a technical issue at CME Group that disrupted futures trading including for stock indices, treasuries, gold and oil contracts. The S&P closed 0.5% higher on the day and ended a volatile month near unchanged. Little over a week ago, the index had been down close to 5%. Other global stock indices were also near flat. The US dollar was broadly stable against G10 currencies and treasury yields edged higher.

BNZ Markets Today

The overnight trading session has been quiet given the US Thanksgiving holiday, with little news or price action.

S&P500 futures are flat and the Euro Stoxx 60 index closed up just 0.1%. US 10-year Treasury futures have traded a tight range and are little changed from the NZ close. European rates show little movement. As the market fully digests the UK Budget, the 10-year UK gilt yield is up 3bps to 4.46%, reversing about half of the fall of the previous day.

BNZ Markets Today

There was limited economic data to provide the market with direction. Initial jobless claims fell slightly despite expectations for a modest increase. Core US durable orders for September beat the consensus estimate but the data is largely stale by this point. Treasury yields increased following the claims data, led by the front end of the curve, though moves were not large. 10-year yields have since retraced and are little changed at 4.01%.

BNZ Markets Today

There has been plenty of news overnight to digest. Oil prices are lower as a Ukraine-Russia peace deal looks closer than ever. US data released were soft and there was a report that Trump is most likely to select the most dovish candidate as the next Fed chair. The USD is broadly weaker and the 10-year rate has slipped below 4%. The NZD has pushed higher but has underperformed against EUR, GBP and JPY ahead of the RBNZ’s meeting today.

BNZ Markets Today

Newsflow has been light. The only market movement of note has been an extension of Friday’s rally in US equities, with another solid gain to kick off the new week. Currencies and bonds show only small movements, and the NZD continues to languish just over 0.56.

BNZ Markets Today

US equities rebounded on Friday after a week characterised by erratic price action. The S&P closed 1% higher following comments from a top Federal Reserve official that raised expectations for a December rate cut. Investors remain cautious after the wild swings in equity markets in recent sessions. The S&P has its biggest intraday reversal on Thursday (3.6%) since the Liberation Day volatility in April. Despite the rebound on Friday, the index fell almost 2% last week and is down 3.5% so far this month. US treasuries rallied and the US dollar index was stable with mixed returns for G10 currencies.

BNZ Markets Today

US equities pared earlier gains and have shown a sharp, steady decline in the two hours leading up to the publication of this report. A lift in the US unemployment rate resulted in lower yields, with the shift in risk sentiment adding to that move. Commodity currencies have underperformed overnight, seeing the NZD fall back to just below 0.56.

BNZ Markets Today

The most notable market movement has been broad gains in the USD, driving the NZD below 0.56. US equities are flat ahead of Nvidia’s earnings announcement, while Treasuries continue to trade a tight range.

BNZ Markets Today

Risk sensitive assets remained under pressure overnight after the weak Asian session yesterday. There is growing caution from investors ahead of Nvidia’s earnings and about the elevated valuations in the artificial intelligence sector. There are also concerns about the required capital expenditure which is reliant on issuing huge amounts of debt. The S&P is lower in afternoon trading and there have been large falls across European and Asian markets. The VIX index of implied S&P volatility, increased to 26, the highest level since the liberation day turmoil in April.

BNZ Markets Today

The new week has begun with small net changes in US equities and Treasuries and modest changes in currencies. The NZD trades this morning at 0.5670, up slightly overnight but down slightly from last week’s close.

BNZ Markets Today

US equities rebounded from sharp decline and closed near to flat. After a weak session the previous day, the S&P had initially fallen more than 1% before recovering. Investors have cited high valuations for technology firms and reduced expectations for easing by the Federal Reserve as headwinds for the equity market. The were heavy losses for European and Asian markets earlier in the day. US treasury yields increased while the US dollar was stable on the major crosses.

BNZ Markets Today

The end of the US government shutdown has been met with a decent fall in US equities and slightly higher US rates, as expectations for Fed easing fade. Despite that backdrop, the USD is broadly weaker. The NZD has pushed up to 0.5670 and NZD/AUD recovered all of its loss following the strong Australian labour market report, with the AUD underperforming overnight.

BNZ Markets Today

Market movements have been modest in the absence of any breaking news.

The end of the US government shutdown is imminent later today, when House lawmakers vote on a bill that has already been approved by the Senate and President Trump. There will be some delays in reopening over coming days so the economic hit will endure a little longer, before activity bounces back. By next week we might see the return of some official economic releases. The government will be funded through 30 January, while select agencies will be funded through the whole fiscal year. Some work will be required to avoid another shutdown in just over two months.

BNZ Markets Today

US equites are marginally lower in afternoon trading but have largely maintained the gain from the previous session on optimism the longest US government shutdown is coming to an end. Stocks in Europe extended higher. The Euro Stoxx index advanced more than 1%. Global bond yields are broadly lower, and gilts outperformed after softer than expected labour market data. The US dollar is broadly weaker against G10 currencies. Oil prices are higher with Brent crude trading above US$65 per barrel.

BNZ Markets Today

Risk sentiment was underpinned at the start of the trading week amid expectations for deal that would end the longest ever US government shutdown. The US Senate took a step towards re-opening the government after a group of Democrats crossed party lines to endorse a compromise plan. The Senate will need vote on the deal, which is not currently scheduled, then the House will need to pass the bill, before President Trump signs it into law. The political developments provided a boost to global equities. The Euro Stoxx closed 1.8% higher and the S&P has gained 0.7% in afternoon trading while credit spreads have tightened.

BNZ Markets Today

The S&P declined by close to 1.5% on Friday, before staging a recovery, after Senate Democrats scaled back their demands to end the government shutdown. Investor sentiment had been impacted by signs of weakness in the US labour market and falling consumer confidence. Technology stocks remain in focus amid concerns about high valuations. Major equity indices in Europe and Asia closed lower. Global bond markets were mixed while the US dollar was broadly weaker against G10 currencies.

BNZ Markets Today

US Treasuries reversed the previous day’s selloff, with the market supported by some soft US labour market reports, with rates down about 5-8bps for the day. US equities are down 1%. The risk-off mood has seen the NZD and AUD underperform, both falling about 0.6% overnight.

BNZ Markets Today

There has been a decent selloff in US Treasuries overnight following stronger than expected US economic data and the US Treasury’s quarterly refunding announcement. The 5-7bps lift in yields hasn’t perturbed the US equity market, with a decent rebound after yesterday’s hefty loss. Currency markets show little response to higher US rates. The NZD is a touch stronger overnight and over the past 24 hours.

BNZ Markets Today

A risk-off tone has pervaded markets, driving down global equities and supporting bond markets. JPY has outperformed and the USD is broadly stronger, with the NZD probing a fresh seven-month of 0.5655 and Bitcoin has fallen to its lowest level since June, trading around the USD101k mark.

BNZ Markets Today

Risk sensitive assets are little changed. The S&P is close to flat in afternoon trading and there was limited reaction to the manufacturing ISM which continues to point towards sluggish activity in the sector. Treasury yields are higher and the recent advance in the US dollar index has taken a breather. Oil prices were stable, following the weekend announcement that OPEC+ planned to pause output increases in the first quarter of 2026, after raising production in December. Brent crude is trading close to US$65 per barrel.

BNZ Markets Today

US equities ended the month on a positive note. Earnings season remains in focus for investors. The vast majority of the 60% of S&P firms that have reported results so far have exceeded analyst estimates according to Bloomberg. The S&P closed 0.3% higher extending gains for October to 2.3%. Other global equity indices were mixed. The Nikkei surged 2% to a fresh record while European stocks closed lower. Price action in global bond markets was subdued, and the US dollar extended its recent move higher.

BNZ Markets Today

The rally in US equities has paused after investors reduced expectations for an interest-rate cut in December. This follows comments from Federal Reserve Chair Jerome Powell at the FOMC yesterday that a cut at the next meeting was far from a done deal. The S&P is modestly lower in afternoon trade while the Euro Stoxx closed near flat. The dollar extended its post-FOMC rally, particularly against the yen, which weakened after the Bank of Japan held interest rates steady.

BNZ Markets Today

There were small net changes across global asset markets ahead of the US Federal Reserve’s rate decision this morning. US equity indices were marginally higher, and treasury yields increased 2-3bp across the curve. An initial advance for the US dollar index faded leaving major FX pairings little changed. Commodity currencies including the AUD and NZD made small gains, alongside the Canadian Dollar, with the Bank of Canada rate cut having little impact. Copper prices hit a record high in London amid optimism on US-China trade talks and challenging supply dynamics.

BNZ Markets Today

The S&P has registered a fresh intra-day record high. Equities are supported by solid corporate earnings and a new deal from OpenAI and Microsoft which saw the latter company’s valuation reach US$4 trillion. Details have emerged about the potential US-China trade deal. Under the framework the US will roll back some tariffs if China reduces the exports of the chemicals that produce fentanyl.

BNZ Markets Today

US and Asian equity indices have reached fresh record highs, after encouraging signs from negotiations between the US and China, ahead of a leaders summit this week. Equities have been supported following benign US CPI data, which was released on Friday, and reinforced expectations for a 25bp rate cut when the Federal Reserve meets later this week. The US dollar is little changed and treasury yields are modestly higher. Gold prices fell below US$4,000 an ounce on diminished haven demand.

BNZ Markets Today

A surge in oil prices, after the US imposed additional sanctions on Russia, has contributed to higher treasury yields as the market looks ahead to CPI data this evening. The CPI report is the first major economic release since the government shutdown began. Risk sensitive assets are generally firmer. Equity indices in Asia and Europe closed higher and US equities are currently in positive territory. The AUD and NZD gained against the US dollar while moves in major currencies were modest.

BNZ Markets Today

Risk sensitive assets have traded with a soft tone overnight. Outside of the FTSE, which gained after softer than expected UK CPI data, major equity indices have declined. Stocks in Asia fell and the Euro Stoxx closed 0.8% lower while US equity indices have registered losses in afternoon trading. Absolute moves across currency and rate markets have been small with limited economic data or other catalysts to prove direction. Oil prices sustained recent gains with Brent crude near US$62.70 per barrel.

BNZ Markets Today

The key market move overnight has been a slump in gold and silver prices following their explosive run higher. Global equity markets continue to push higher, with many bourses reaching new highs. Global rates are lower, with the US 10-year rate nudging down to 3.95%. Net currency moves have been modest apart from the yen weakening after Takaichi won the vote to become Japan’s PM.

BNZ Markets Today

Newsflow has been light but the mood in equity markets have been positive, with investors shaking off the temporary bout of pessimism that pervaded late last week. The S&P500 is currently up over 1% and the Euro Stoxx 600 index closed 1% higher.

BNZ Markets Today

Risk sentiment turned positive on Friday from the European open, driving a modest gain for US equities and resulting in the US 10-year rate rising from a low of 3.93% to a NY close of 4.01%, up 7bps from the NZ close. Currency markets showed modest movements, with the NZD range trading and closing the week at 0.5725.

BNZ Markets Today

US equites are modestly weaker and US Treasury yields are lower, with risk sentiment weakening during the middle of the NY trading session. The 2-year Treasury rate is probing three-year lows while the 10-year rate has fallen below 4%. Currency movements have been modest, but commodity currencies have slightly underperformed overnight. The NZD trades at 0.5735 and NZD/AUD has sustained a lot of the gain seen in the wake of yesterday’s softer Australian employment report.

BNZ Markets Today

Newsflow has been light. US equities are up slightly, paring strong gains after the open. The US 10-year rate took another peak below 4% but yields are now modestly higher. Currency movements have been modest and the NZD is down a touch around 0.5710.

BNZ Markets Today

It has been a rollercoaster ride for markets with a big swing in the USD and US equities, reflecting gyrations in risk sentiment. US equities show a modest gain, recovering from a sharp loss. A stronger USD from yesterday afternoon drove down the NZD to a fresh six-month low below 0.57 before recovering. The US 10-year rate dipped below 4% overnight and currently trades at 4.03%.

BNZ Markets Today

Cooler heads are prevailing after the US-China trade war escalated on Friday, and this has contributed to some recovery in risk assets. US equities have recovered more than half of Friday’s loss and the AUD is the best major FX performer after being the worst performer on Friday. The NZD shows a small gain. The US bond market is closed for the Columbus Day holiday, but the futures market shows a small lift in yields.

BNZ Markets Today

Risk sentiment took a major dive during the overnight Friday trading session as the US-China trade détente abruptly ended. US equities tumbled, alongside a strong rally in US Treasuries that sent the 10-year rate towards 4%. FX safe-havens JPY and CHF outperformed, while the AUD was whacked the hardest. The NZD fell to around 0.5720 and was weaker on the key crosses apart from a decent bounce in NZD/AUD to 0.8835. Oil prices tumbled while gold recovered back above USD4000. US-China trade war escalation sets the scene for some volatile trading conditions through the rest of the month.

BNZ Markets Today

Without any obvious triggers, it has been a bad night for investors, with lower US and European equities, higher global rates and even gold prices are notably weaker. The USD is broadly stronger, and the NZD has fallen 1% from the NZ close to 0.5740.

BNZ Markets Today

Newsflow has been light again. US equities have recovered after their one-day dip and US Treasury yields show small movements. Overnight, the NZD is the best performing currency we closely follow, recovering a lot of its loss seen after the RBNZ’s dovish 50bps cut yesterday, trading around 0.5780.

BNZ Markets Today

US equities have broken a winning streak and are modestly weaker overnight. Weaker risk sentiment has supported Treasuries, with the 10-year rate down 4bps to 4.11%. The USD is broadly stronger and the yen remains under pressure. NZD has weakened towards 0.58. All eyes will be on the RBNZ policy update today, with the market split between views of a 25 or 50bps rate cut.

BNZ Markets Today

There has been no economic news, but plenty of political news to keep the market on edge, including significant moves in Japan’s equities, bonds and currency following the shock selection of the new LDP leader. Overnight, France was inflicted with more political turmoil. The US government remains in shutdown mode. NZ is a beacon of stability by comparison, with the NZD trading at its high for the day around 0.5840, and gains on most crosses, including a 2% surge in NZD/JPY.

BNZ Markets Today

Last week ended on an uneventful note, not helped by the US government shutdown that resulted in delay in publishing the key US employment reports. US equities were little changed, and US Treasury yields pushed higher, partially reversing the fall in rates earlier in the week. The USD was broadly weaker in overnight trading, but moves were modest. The NZD pushed a little higher, closing the week around 0.5830.

BNZ Markets Today

Newsflow has been light and markets show only modest movements amidst a US government shutdown. US equities show little change and US Treasuries have traded narrow ranges, with a small flattening bias. The USD is slightly stronger overnight. The NZD has traded a narrow range and is currently 0.5820. Oil prices are lower for a fourth consecutive day.

BNZ Markets Today

After a soft tone for risk sentiment in Asia, as the US government shutdown took effect, the S&P has recovered from an initial dip on open to be little changed. European equity indices registered solid gains. A weaker than expected ADP private payrolls reading was consistent with other data indicating the labour market is slowing and contributed to lower bond yields. The US dollar was mixed against G10 currencies and oil prices extended the recent decline. Brent crude traded towards US$65 per barrel.

BNZ Markets Today

US equities are little changed overnight, with hopes for a last-minute deal to avoid a government shutdown fading, which would create uncertainty and delay the publication of key economic releases. The S&P wasn’t impacted by weaker-than-expected consumer-confidence data and oscillated in a narrow range. Oil prices extended the recent decline on concerns about increased OPEC+ supply - Brent crude traded towards US$67 per barrel. There was limited movement across government bond markets, and the US dollar is modestly weaker.

Outlook for Borrowers: Post November MPS

The Reserve Bank of New Zealand (RBNZ) reduced the Official Cash Rate (OCR) by 25bp to 2.25% at the Monetary Policy Statement (MPS) on Wednesday. The rate cut was widely expected by analysts. Market pricing implied a small chance of a larger cut following the surprising 50bp move in October. The decision was reached by 5-1 majority. The dissenter preferred to leave rates on hold, which was the alternative option discussed by the Committee. This was Governor Hawkesby’s final meeting with Dr Anna Breman beginning her term on 1 December.

Significant moves and building buffers

Volatility and uncertainty seem to be omnipresent with the primary sector seeming to see more than its fair share. It shows up in many forms as we have witnessed over recent seasons. Change can occur quickly.

Dipping dairy dynamics

Dairy prices have been generally strong in 2025 and the national income flows from it have been robust. However, the dynamics are changing with the global dairy market now clearly softening. A surge in global milk supply is putting material downward pressure on prices.

Export incomes to support activity

Primary sector export returns have been stellar over the past year. Major sectors like dairy, beef, lamb, and kiwifruit have seen significant gains. While not every sector has enjoyed strong gains, the sector heavy weights have driven overall agricultural exports to $53.0b in the year to August 2025, some $7.5b higher than a year earlier.