Financial Markets Wrap

NZD tumbles through November

Jason Wong -

The NZD trended lower through November, against a backdrop of numerous positive US economic surprises that proved USD-supportive, with a more hawkish pivot from Fed policy makers thrown into the mix. NZ rates were mainly lower as the market priced in a less aggressive tightening path from the RBNZ. World equities hit fresh highs, before the discovery of a new COVID19 variant Omicron reined in risk appetite. Global rates were moderately lower despite ongoing positive inflation surprises that saw G7 inflation at a thirty-year high.

NZD rebounds in October

Jason Wong -

The return of the global relation theme in October saw commodity currencies outperform.
Higher NZ, Australian and Canadian short-term rates supported the move. NZD/USD rose nearly 4%.
NZ rates surge across the whole yield curve; 5-year swap rate now up over 200bps for the year.

NZD struggles in September as USD strength broadens

Jason Wong -

The USD showed broad gains on weaker risk appetite and another hawkish tilt by the Fed, sending NZD down 2%
Backdrop for NZD not helped by new global growth potholes, including China growth risks and surging energy prices
Global rates universally higher; NZ rates market well-priced for a series of 25bps hikes over coming months

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