BNZ Research

Our research team offers expert commentary on economics, foreign exchange, fixed interest and credit, to help inform your organisation’s risk analysis and decision making. 

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Currency Research

NZD/AUD: Near The Top Of The Range?

Jason Wong -

The cross is above our short-term and long term valuation estimates near 0.94 and 0.91 respectively.

We see the cross rate as being near the top of its historical trading range. While there’s a chance that a fresh high is made in the near-term – the coronavirus being a new factor to consider – through the year we see risks more skewed towards the downside.

Our forecasts are anchored at 0.94-0.96 through 2020. It would be prudent for importers to take cover at 0.96 and higher, while exporters can afford to wait for more attractive levels to add to cover.

Full Currency Research is available to BNZ Wholesale clients upon request, please email bnz_research@bnz.co.nz to subscribe.

NZD Corporate FX Update

Jason Wong -

Our NZD projections are consistent with the low volatility environment continuing. Near-term consolidation gives way to an upward bias later in the year.

Full Currency Research is available to BNZ Wholesale clients upon request, please email bnz_research@bnz.co.nz to subscribe.

Six questions for the NZD in 2020

Jason Wong -

With a new year underway, we try to answer some key questions which will determine the path of the NZD this year. They are:
- Will a better global economy drive the NZD?
- Have NZ’s commodity prices or terms of trade peaked?
- Will the NZD continue to track CNY?
- Will interest rates drive the NZD?
- Will NZD volatility remain low?
- Will the USD finally weaken materially?

Full Currency Research is available to BNZ Wholesale clients upon request, please email bnz_research@bnz.co.nz to subscribe.

NZD: The upswing begins?

Jason Wong -

Six weeks ago we became more positive on the NZD and questioned whether a sustained recovery was imminent (see “NZD: The makings of a recovery?”, 22 October 2019). We’ve been patient, and last night the NZD broke higher, out of the 0.62-0.6450 trading range evident since early August. Is this the beginning of the awaited upswing?

NZD Corporate FX Update

Jason Wong -

We upgrade our NZD forecasts, now seeing it drift higher, rather than lower, and anchored around 0.65 through to the middle of next year.

Economy Watch

CPI Inflation Firming Up

Craig Ebert -

Overall, there was plenty in this morning’s CPI report to keep RBNZ/OCR downside ruminations at bay for the foreseeable future, even stir thoughts of eventual OCR upside. Having said this, we are also conscious of things that could yet challenge GDP growth, thus undermining the case for strengthening (core) inflation.

No Xmas cheer

BNZ-BusinessNZ -

New Zealand’s manufacturing sector fell back into contraction for the last
month of 2019, according to the latest BNZ - BusinessNZ Performance of
Manufacturing Index (PMI).

NZIER QSBO

Stephen Toplis -

From our perspective, the QSBO will provide no pressure either way for the RBNZ to awaken from its slumber. To us it delivers further evidence that the Bank can sit on its hands for a long time yet. For now the economy seems uncannily stable and boring.

Which Santa Delivered GDP Gift?

Stephen Toplis -

New Zealand’s economy grew a very solid 0.7% in the third quarter of 2019. More importantly, GDP proved to be yet another indicator suggesting the economy has, for now at least, successfully negotiated an environment that threatened to push the country into recession.

Dynamics More Interesting Than Deficit

Doug Steel -

New Zealand’s current account deficit came in at 3.3% of GDP for the year to September 2019. This was marginally lower than market (and our) expectations of 3.4%, although this seemed as much to do with a small downward revision to history as anything fundamental.

Pessimism Wilting

Stephen Toplis -

It would be a stretch to suggest that businesses in New Zealand are optimistic about their lot but it is fair to say they are getting less pessimistic by the day. This being the case, the need for extra “help” from either the fiscal or monetary authorities can be considered to be in decline.

2 Steps Back

Craig Ebert -

New Zealand’s services sector experienced a dip in expansion levels during November, according to the BNZ - BusinessNZ Performance of Services Index (PSI).

Ebbs and flows

Doug Steel -

New Zealand’s manufacturing sector experienced slower expansion levels in November, according to the latest BNZ - BusinessNZ Performance of Manufacturing Index (PMI).

Q3 GDP: Steadying Growth, From a Much Stronger Base

Craig Ebert -

What if we were to say next Thursday’s September quarter GDP will print near 2% higher than many people figure on? That’s where our analysis is getting to, as substantial upward revisions to historical GDP data also come to pass. Sure, this will still leave a picture of a slowing economy, since a point of (increased) strength back in 2017/18. However, there is also a sense that the slowdown is now basing. Reflective of this, we anticipate a 0.5% (2.3% y/y) expansion in Q3 GDP.

BNZ/SEEK Employment Report

Craig Ebert -

September’s big jump in job advertising has been followed by softer months that have essentially given up those gains, with November’s print falling a seasonally adjusted 0.8%, after easing back 0.3% in October. This has all but flattened off the trend measure. This advanced just 0.1% in November. Flatness was also indicated by its annual rate of increase subsiding to -1.0%, while the seasonally adjusted index was down 0.8% compared to November 2018.

Government delivers infrastructure boost

Stephen Toplis -

The Government reports an estimated fiscal surplus of 2.4% for the year ended June 2019, substantially greater than the 1.2% estimated at Budget time.
The budget balance will move into deficit this financial year (0.3% of GDP). It is forecast to return to surplus (0.5% of GDP) in the year to June 2022. It rises to 1.5% of GDP by June 2024.
Net core crown debt will rise from 19.0% of GDP to 21.5% in June 2022. It is then forecast to fall to 19.6% of GDP by June 2024.
Treasury forecasts GDP growth of 2.2% for the year ended June 2020. Growth of 2.8%, 2.7%, 2.5% and 2.4% are then expected in the years ended June 2021, 2022, 2023 and 2024 respectively.
The bond tender programme for the three years ended June 2022 is unchanged. An extra $2.0 billion will be issued in 2022/23 raising that year’s offering to $8.0 billion. In 2023/24 the bond tender programme will be $6.0 billion.

RBNZ Capital Review Not So Scary

Stephen Toplis -

The “best” news from today’s announcement is that the uncertainty around bank capital requirements is now largely behind us. Knowing the lie of the land – even if you don’t like the look of it – is usually so much better than not knowing it. And, in this case, the certainty is significantly better than once feared. At the margin, this should lift confidence reducing our downside fears for growth and the probability of further interest rate reductions.

Business Clouds Lighten

Craig Ebert -

We are sure we weren’t alone in sniffing an improvement in this afternoon’s ANZ Business Outlook survey. But we certainly didn’t expect as big a bounce as it posted. Importantly, own-activity expectations shot up to +12.9, from the -3.5 level they sank to last month. While they are still clearly below their long-term norm (of +26.5) they are now much less confronting to our view that GDP growth will trundle along at around 2% per annum, close to trend.

Retail Trade Trending Steadily Higher

Craig Ebert -

Our feel for consumer spending is that it’s trending steadily higher. So today’s reported 1.6% increase in September quarter retail trade volumes, for an annual expansion of 4.5%, likely overstates the case.

Hot Milk

Doug Steel -

The NZ milk price outlook continues to improve. Dairy prices have been firm in 2019 and have pushed higher over recent auctions. Indeed, today’s 1.7% gain in the GDT Price Index is the fifth consecutive increase taking the cumulative gain to 8.3% since the most recent trough in early September. GDT prices are heading toward the top of a trading range that has held them since 2014 and are now a chunky 26.4% higher than a year earlier. Price gains have occurred as solid demand has bumped up against docile global supply.

Path to improvement

Craig Ebert -

Expansion in New Zealand’s services sector climbed above its long term average level of activity, according to the BNZ - BusinessNZ Performance of Services Index (PSI).

Back in black

Doug Steel -

October brought some much needed relief to the manufacturing sector with the Performance of Manufacturing Index (PMI) jumping back into expansion mode. There were widespread gains across various segments including regions, industries, and firm sizes. To be sure, at 52.6 overall, the PMI is hardly what you would call strong. But it is certainly much better than the previous three months where the index languished below 50 which indicated a sector going backwards.

BNZ/SEEK Employment Report

Craig Ebert -

The jump we saw in September’s job advertising has been somewhat nipped in the bud by October’s result.

MPS Preview: Nervous Nellie Edges Steady Eddie

Craig Ebert -

For next week’s RBNZ Monetary Policy Statement, the OCR committee will probably feel the case for another rate cut is finely balanced – in the least not obvious. After much toing and froing, however, it will probably err on the side of a 25 basis point cut. This is even though we think there is no overwhelming basis for it, at this juncture.

Labour Market Revealing Its Inflationary Teeth

Craig Ebert -

This morning’s labour market data were broadly in line with market expectations. However, the results might have the Reserve Bank wondering if the jobs market is more inflationary than it has judged.

Financial Markets Wrap

Risk assets outperform in December

Jason Wong -

Very low currency volatility in November

Jason Wong -

• Higher risk appetite as markets await US-China trade deal news
• NZD/USD flat with little volatility but NZD crosses stronger
• Global rates push higher

Interest Rate Strategy

NZ BEIs – reasons to be positive as we look ahead in 2020

Nick Smyth -

2019 should have been an especially challenging year for NZ breakevens (BEIs). The US-China trade war flared up and a broad-based global growth slowdown took hold. Government bond yields experienced a massive rally. BEIs fell to levels well below central bank inflation targets in most markets as market participants started to question the effectiveness of monetary policy in lifting inflation.

Full Interest Rate Research is available to BNZ Wholesale clients upon request, please email bnz_research@bnz.co.nz to subscribe.

Safe As Houses: What does the increase to Housing NZ Ltd issuance mean?

Nick Smyth -

Government increases Kāinga Ora borrowing protocol
Earlier this week, the government announced an increase to the borrowing protocol (effectively a debt limit) for Kāinga Ora – Homes and Communities. Kāinga Ora is responsible for housing and urban development, including the provision of state housing, which is a policy priority for the government. Housing New Zealand Limited (hereafter ‘Housing’) is a subsidiary of Kāinga Ora and funds under its own name in debt capital markets. The increase to the debt limit will allow Housing to fund greater investment in social housing.

Full Interest Rate Research is available to BNZ Wholesale clients upon request, please email bnz_research@bnz.co.nz to subscribe.

The possibility of negative rates in NZ – an explainer

Nick Smyth -

The RBNZ sets the Official Cash Rate (OCR). This is an overnight interest rate that banks earn on cash balances they hold with the RBNZ. The OCR is currently 1% - an historic low.

Bond market implications from HYEFU – fiscal stimulus inbound?

Nick Smyth -

The Half-Year Economic and Fiscal Update (HYEFU) is next Wednesday, 11 December. Treasury will update its forecasts and economic assumptions and New Zealand Debt Management (NZDM) will provide an update on the NZGB bond programme. At the Budget in May, the bond programme was set at $10b for this fiscal year. Net issuance of nominal NZGBs was set to be positive in the current fiscal year for the first time since FY 2015/16.

Five reasons why NZ-US spreads can widen from here

Nick Smyth -

NZ and US rates have experienced a major rally in 2019 but, through that all, the 10 year NZ-US spread has been relatively stable (Chart 1). The 10yr spread has broadly tracked expectations the OCR-Fed funds rate differential, which have mostly hovered between -50bps to -75bps.

BNZ RV Chart Pack

Nick Smyth -

Swap-bond spreads appear to have found a base. Short-end NZGBs have outperformed on the ASW curve.
The NZGB 2027 is the cheapest bond on the curve. The 2033 has richened over the past fortnight and no longer stands out as cheap.
NZ BEIs have consolidated over the past fortnight. We think they are likely to face resistance ahead, unless the nominal sell-off gains momentum.
Long-end LGFA-NZGBs compress but remain within recent trading ranges.
Housing NZ bonds underperform noticeably.

Outlook for Borrowers: Post-November MPS

Nick Smyth -

The RBNZ threw another significant surprise to financial markets yesterday, in keeping the OCR unchanged at 1%. Prior to the decision, the market had priced around a 75% chance of a rate cut, a view shared by a large majority of economists (ourselves included). There was a significant market reaction, with wholesale interest rates rising by up to 16bps and the NZD appreciating by 1%.

The beginning of the end? NZ long-end rates outlook

Nick Smyth -

NZ longer-term rates hit record lows at the start of last month, with the 10 year swap reaching 1.1% and the 10 year NZGB yield briefly traded below 1%, before recovering over 30bps over the remainder of October. The massive decline in rates this year has been more a global story than a NZ-specific one (notwithstanding the RBNZ’s 50bp OCR cut in August). 10y NZ-US and NZ-AU spreads have been broadly range-bound this year (see Chart 1). In this note we recap recent developments and set out our medium-term outlook for the NZ long-end.

The two key drivers of NZ long-end rates are global rates, especially the US and Australia, and the RBNZ outlook.

BNZ RV Chart Pack

Nick Smyth -

NZGBs have underperformed on a cross-market basis over the past fortnight as the market has pared back OCR expectations.
Swap-bond spreads appear to have found a base, albeit near multi-year lows. Short-end spreads have moved wider, as we had expected.
NZGB 2029s have cheapened vs. 2027s and 2033s. The 29s remain rich, albeit less so than before.
NZ 10y BEI makes new highs for the year as nominal bonds have sold off.
Modest widening in long-end LGFA-NZGB spreads ahead of tender tomorrow.

Markets Outlook

Exports Challenges in Perspective

BNZ Research -

It’s wise to keep your GDP expectations up to the minute, when New Zealand’s two biggest export industries are suddenly encountering headwinds. Such is the case now. In the case of the tourism sector, it is obviously facing challenges around the coronavirus. Local dairy output, meanwhile, is being tested by increasingly dry soil conditions. These issues pose downside risks to our already tepid-looking GDP growth expectations for the first half of 2020.

Inflation: Testing, Testing, One Two Three

BNZ Research -

Annual CPI inflation in New Zealand looks to be closing in on the 2.0% mid-point of the Reserve Bank’s target band. We believe Friday’s Q4 CPI will get it up to 1.8%, from 1.5% in Q3 (en route to 2.1% in Q1 2020). This is based on a quarterly increase of 0.4%, in line with market expectations.

This is higher than the RBNZ expected in its November MPS, namely a quarterly increase of 0.2% and 1.6% y/y.

2020: Limited Upside

BNZ Research -

Our base case for 2020 is that the NZ economy continues to expand close to a trend-like pace, while financial markets broadly hang together. This should keep the RBNZ firmly on hold at a record-low 1.0% cash rate. With this, the exchange rate could reflect relatively more of the gyration in the marginal economic news. While we are conscious of the many things that could trip the NZ economy up this year, we also think that upside news needs to be decent part of the scenario analysis now. Upside potential for the New Zealand economy itself, however, would appear to be limited.

Q3 GDP 2% Higher than Anticipated?

BNZ Research -

If we are right with our 0.5% call on Q3 GDP growth, it will be stronger than the 0.3% increase the RBNZ had in its November Monetary Policy Statement. This will add to the sense the economy is holding up, when many were getting nervous on it. Revisions to GDP – also integral to Thursday’s national accounts – will probably elaborate on the impression the economy has been doing better than generally appreciated. Indeed, these could translate into a level of real GDP 1-2% higher than currently estimated.

How “Significant” Fiscal Stimulus?

BNZ Research -

This week’s smattering of economic data will be overshadowed by the government’s Half-year Economic and Fiscal Update (HYEFU), due Wednesday (1:00pm). This will reveal what Finance Minister, Grant Robertson, meant by a “significant” fiscal stimulus. We suspect it’s principally about capital expenditure (leaving options related to households until next year’s election Budget).

High Noon For Bank Capital

BNZ Research -

There is market chatter that the Reserve Bank, having completed its consultation process in full, might take a smidge off the originally proposed capital target percentages. Also, that it might extend the transition period beyond the five years initially proposed. Overall, however, the bank-capital policy will surely mean for a substantial change from what we have. This will have, along with purported benefits, costs, which will have to show up somewhere, for someone. And not just in the price of credit but more directly in its volume of supply.

A Week to Sate Data Watchers

BNZ Research -

If things are – as the Reserve Bank has proposed – firmly in data-watching mode, then there are loads of it on offer this week. None of it is top-tier. But there are copious amounts of the next best thing. This will give us a good feel on momentum, across various aspects of the economy. The economic news will be complemented by financial-sector angles of Wednesday’s RBNZ Financial Stability Report (FSR).

Stronger GDP (and Productivity)

BNZ Research -

One of the biggest problems with productivity is in trying to measure it. In the old days of nuts and bolts and punch-clocks, it wasn’t all that difficult. But these days productivity is far more complex in concept and measurement – particularly with the service sector increasingly dominant in the economy.

In The Balance

BNZ Research -

To our way of thinking, there is not a strong case for the Reserve Bank cutting its cash rate even further at Wednesday’s Monetary Policy Statement. Be that as it may, we believe the OCR committee will feel the case for another rate cut is finely balanced. And we think that, after vigorous debate, it will err on the side of a 25 basis point cut (to 0.75%), while maintaining a slight easing bias. This is mainly as the committee remains nervous about GDP growth not being as strong as it forecast in August, and all that that entails for its inflation and employment projections.

Eyes On The Labour Market

BNZ Research -

Domestic focus this week will be centered fair and square on Wednesday’s plethora of labour market data. With financial markets undecided and twitchy on whether the RBNZ will cut the OCR again next week, each piece of incoming data is getting analysed to the third degree.

Markets Today

BNZ Markets Today

Jason Wong -

A sense of calm has returned to markets after the coronavirus-driven turmoil of recent days. US equities and Treasury yields are higher. While most currency movements have been modest, the NZD has underperformed a little, alongside GBP.

BNZ Markets Today

Jason Wong -

The spreading coronavirus has dominated markets with a significant risk-off move evident. Equity markets have fallen, some more than 2%, while global rates are much lower. Currency movements have been well contained apart from notable falls in the AUD, NZD, CNY and Scandi currencies.

BNZ Markets Today

Jason Wong -

US equities ended the week on a soft note and global rates were lower, with traders worried about the escalation of the deadly Wuhan coronavirus. Currency movements remained well contained, with JPY slightly outperforming alongside the USD on Friday night.

BNZ Markets Today

Doug Steel -

Risk off sentiment has percolated through markets overnight. Equities and bond yields are lower, while JPY has lifted. Commodity prices are generally lower, although safe-haven gold is an exception.

BNZ Markets Today

Jason Wong -

Equity and bond markets haven’t shown much signs of life overnight and the same goes for most currencies, apart from notable strength in GBP on stronger data and a weaker CAD on a dovish Bank of Canada.

BNZ Markets Today

Nick Smyth -

Reports of further cases of coronavirus have dominated headlines over the past 24 hours. Asian equity markets and global rates fell but US equities have rebounded over the past few hours and are now up on the day. Currency moves have been muted.

BNZ Markets Today

Jason Wong -

There is a dearth of news out there, with the Martin Luther King holiday in the US, while the Wellington anniversary holiday yesterday made for an uneventful local session. This is reflected in market pricing, with little change in US equity and Treasury futures and a lack of currency movements.

BNZ Markets Today

Nick Smyth -

Markets ended last week on a positive note, with equities making new highs and bond yields nudging higher. The GBP was the worst performing currency as markets scaled up BoE easing expectations after a dire retail sales report. A stronger USD on Friday helped push the NZD down to 0.6615. The next 24 hours should be very quiet, with Wellington Anniversary Day taking place and the US closed for Martin Luther King Day tonight.

BNZ Markets Today

Nick Smyth -

It has been more of the same overnight, with equity markets making new highs but subdued moves in bond yields and currencies. Better-than-expected US data has supported the USD, but the NZD has outperformed and is up on the day.

BNZ Markets Today

Nick Smyth -

US equities continued to power ahead to fresh record highs overnight with the US and China finally signing the long-awaited Phase-One trade deal. In contrast, global rates have fallen, after a very weak UK CPI release led the market to price a better-than-even chance of a BoE rate cut later this month. Despite broad-based USD weakness, the NZD has again underperformed and is unchanged from this time yesterday.

BNZ Markets Today

Nick Smyth -

Market moves have been subdued overnight ahead of the signing of the US-China Phase-One trade deal tonight. A lower-than-expected US core CPI release has led to a small fall in global rates while equities have moved sideways despite a strong start to the earnings season by the big US banks. Currency moves have been small, but the NZD has underperformed overnight.

BNZ Markets Today

Jason Wong -

Markets have begun the new week in a positive frame of mind, with the S&P500 recovering 0.5% to take it back near last week’s record high and global rates pushing higher. Positive risk sentiment sees JPY underperform, alongside a soft GBP as weak data support an easing in policy by the BoE. The NZD and AUD currencies are relatively flat against some strength in CNY.

BNZ Markets Today

Jason Wong -

The new year has started with some market volatility as geo-political tensions in the Middle East have increased. That said, the point-to-point market movements since our last daily report on 20 December are unremarkable. Major currencies are mostly within 0.5% of those pre-Xmas levels, global equities are up just over 1% and, perhaps more notably, NZ and US bond rates are lower (15bps and 10bps respectively).

BNZ Markets Today

Nick Smyth -

There’s not too much to report overnight with markets in the process of winding down before the Christmas break. The S&P500 has nudged up to a fresh record high while Treasury yields are little changed, near five-month highs. The USD is generally weaker, with the NZD breaking above 0.66 a short while ago. NZ GDP data yesterday was broadly in-line with expectations.

BNZ Markets Today

Jason Wong -

Markets are well-contained as trading volumes soften ahead of the holiday season. US equities are flat near record highs while global rates are higher and the US 2s10s yield curve is the steepest since July. Currency movements have been modest, with a hint of CAD strength and GBP weakness.

BNZ Markets Today

Jason Wong -

The key market mover has been a slump in GBP, as fear returned of a possible no-deal Brexit at the end of next year – sigh, the story of 2019 that keeps on giving. Other market movements have been minor apart from some noticeable independent softness in the NZD and AUD.

BNZ Markets Today

Nick Smyth -

Equity markets have made fresh record highs and bond yields have increased overnight as markets digest the US-China Phase-One trade agreement announced on Friday. The positive sentiment created by the trade deal overshadowed another batch of disappointing European PMIs. Currencies, including the NZD, have been quiet so far this week. The ANZ business survey is released today ahead of GDP on Thursday.

BNZ Markets Today

Nick Smyth -

The US-China Phase-One trade deal was announced on Friday night, although the reduction in US tariffs on Chinese imports was less than had been suggested by an earlier WSJ report. There were sharp reversals lower in global rates, the CNH and, to a lesser extent, the AUD and NZD. Equity markets, in contrast, retained most of their earlier gains. The GBP was the star performer in currency markets after Boris Johnson won a majority in the UK general election.

BNZ Markets Today

Jason Wong -

“Getting VERY close to a BIG DEAL with China. They want it, and so do we!” That one tweet by you know who has had the biggest impact on markets this week, trumping the other key risk events. US equities rose to a fresh record high, while the US 10-year treasury yield climbed as much as 11bps to 1.90%. The impact of the tweet on currency markets has been more muted, and has actually supported the USD, with reduced tariffs seen to be positive for the economy.

BNZ Markets Today

Jason Wong -

Markets have been quiet ahead of the FOMC announcement in the next hour or so. The NZD and AUD have trended higher since the NZ close for no obvious reason, seeing the NZD back up probing the high seen earlier this week. Ahead of the FOMC, the USD is slightly on the soft side, while US treasury yields have drifted lower.

BNZ Markets Today

Jason Wong -

There has been a lot of economic data and newsflow over the past 24 hours but financial markets remain in a holding pattern ahead of more important events later in the week. US equities are flat, US treasury yields are slightly higher and the NZD is slightly weaker.

BNZ Markets Today

Jason Wong -

In a quiet start to the week, US equities are flat and there have been only small changes in global rates and currencies.
It’s a fairly action-packed week ahead, but loaded towards the end of the week, with the FOMC meeting Thursday morning NZ time, the ECB meeting Thursday night and the UK election results coming in Friday. All this comes ahead of a scheduled increase in Chinese import tariffs by the US on 15-December on about $160bn of mainly consumer goods.

BNZ Markets Today

Nick Smyth -

A much stronger-than-expected nonfarm payrolls report on Friday night set the scene for increases in bond yields, the USD and equity markets. The NZD rose again on Friday, despite this broad-based USD strength, with upbeat comments from RBNZ Deputy Governor Bascand providing support. The NZD/AUD cross broke above 0.96 for the first time since August. All eyes are on HYEFU this Wednesday for the details of Labour’s “significant” fiscal package.

BNZ Markets Today

Nick Smyth -

Markets have largely been in a pre-payrolls holding pattern overnight. Treasury yields have nudged up, equity markets are little changed, and the USD has continued to drift lower. Yesterday, the RBNZ softened some aspects of its original bank capital proposal, which led the market to pare back OCR rate cut expectations and boosted the NZD. The NZD is trading at a four-month high against both the USD and AUD, with the NZD/AUD cross pushing up towards 0.96.

BNZ Markets Today

Jason Wong -

US equities and bonds reversed course from the previous night’s chunky movements after more trade news headlines, this time with a more positive tone. The US 10-year treasury yield is up 6bps. In currency markets, GBP and CAD lead the way, while the NZD has nudged higher.

BNZ Markets Today

Jason Wong -

US equities have slumped 1% and US treasury yields have rallied hard after President Trump’s comments to reporters about the US-China trade deal. Reaction in currency markets has been more muted. Modest USD weakness has prevailed, helping keep the NZD’s head above the 0.65 mark.

BNZ Markets Today

Nick Smyth -

After what was an exceptionally quiet November, there have already been some big moves to kick off December. Global rates have increased sharply, on increased talk of fiscal stimulus. Meanwhile, equity markets and the USD have declined after a weaker-than-expected ISM manufacturing survey. The NZD is up more than 1% against the USD and has risen on all the crosses, with NZD/AUD breaking above 0.95, after Grant Robertson signalled a “significant” fiscal stimulus over the weekend.

BNZ Markets Today

Nick Smyth -

Friday again saw limited moves across asset classes (oil excluded) with market participation and trading activity lighter than usual after Thanksgiving. Friday brought to an end an exceptionally quiet November in the FX market, with the NZD recording its second-narrowest trading range in 20 years. There is more on the cards for this week, with the final outcome from the RBNZ bank capital review announced, the US ISM surveys, payrolls, and Australian GDP all released. Over the weekend NZ Finance Minister Grant Robertson foreshadowed a “significant” fiscal stimulus, so rates should open higher and steeper this morning.

BNZ Markets Today

Jason Wong -

The US Thanksgiving holiday has meant markets have barely moved, making a dull week even duller. All key currencies are trading within 0.2% of levels this time yesterday, while US equity and bond futures show little movement.

BNZ Markets Today

Jason Wong -

The run of daily record highs for US equities continues, the latest milestone supported by some net positive US data releases, which have also seen UST yields and the USD nudge higher. The NZD has remained stuck in its familiar range and sits around 0.6425.

BNZ Markets Today

Jason Wong -

Another day, another fresh high in the S&P500, although gains have been modest. Currency markets remain range-bound while global rates have ticked lower.

BNZ Markets Today

Jason Wong -

Our celebration yesterday of a new week after last week’s snooze-fest in markets has proved ill-considered as the new week has produced more of the same. While there has been a bit of life in equity markets, currencies and bond markets generally show little movement. GBP has outperformed on polling showing a small increase in the chance of a majority Conservative government.

BNZ Markets Today

Jason Wong -

Last week ended on a fairly quiet note. EUR and GBP underperformed, following weak PMI data while the NZD continued to trade in a tight range. US treasury yields were little changed against a backdrop of lower yields for the UK and euro area.

BNZ Markets Today

Brendan Marsh -

Day five of the week, the weekend nearly upon us and the NZD finds itself still tied to the US64cent level, exactly where we started the week having traded barely a half cent range.

BNZ Markets Today

Brendan Marsh -

Day five of the week, the weekend nearly upon us and the NZD finds itself still tied to the US64cent level, exactly where we started the week having traded barely a half cent range.

BNZ Markets Today

Brendan Marsh -

We open this morning with FOMC minutes on the horizon (NZT 8:00am).

There’s been so much from Powell (FOMC press, Semi-annual Testimony – twice) and a myriad of Fed speakers in past weeks, all generally speaking to the on hold view. While there will be some interest in the diversity of views, there otherwise shouldn’t be any news as such in the release.

BNZ Markets Today

Nick Smyth -

Market moves have been modest again overnight amidst little fresh news. Bond yields have fallen modestly while equity markets are little changed. The AUD has risen overnight, brushing off what were initially seen to be dovish RBA minutes, and this has dragged the NZD above 0.6420.

BNZ Markets Today

Nick Smyth -

There have been few fresh developments overnight, with the exception of a report that China was growing pessimistic about the prospect of a trade deal, and market moves have been reasonably modest. The GBP has outperformed in the FX market as the Conservatives have extended their lead in the polls. The NZD has traded a very narrow range to start the week and domestic rates were virtually unchanged yesterday.

BNZ Markets Today

Nick Smyth -

US equity indices closed last week at fresh record highs amidst more positivity around a US-China Phase-One trade deal. Safe haven currencies fell against the USD while commodity currencies outperformed. Domestically, RBNZ Governor Orr and Assistant Governor Hawkesby reinforced the message that the Bank is on hold for now, although it could cut the OCR again if circumstances change.

BNZ Markets Today

Jason Wong -

Weaker Chinese economic data have seen a decent rally in US treasury yields amidst a risk-off tone. Commodity currencies have underperformed, with weak Australian employment data not helping.

BNZ Markets Today

Jason Wong -

The NZD and NZ rates have been the biggest movers over the past 24 hours as the market was positioned for an RBNZ rate cut that wasn’t delivered. The NZD has sustained the initial market reaction and has traded in a tight range overnight, hovering around 0.64. There has been a modest risk-off tone overnight that has seen global rates head lower.

BNZ Markets Today

Jason Wong -

Markets have remained listless, given the lack of news. US equities are probing fresh record highs while US treasury yields have remained tightly range-bound. The NZD sustained yesterday’s modest loss, ahead of an expected RBNZ rate cut today.

BNZ Markets Today

Jason Wong -

The week has begun on a quiet note, with a lack of news headlines and the US bond market closed for Veteran’s Day holiday. GBP and NZD lead the way in currency markets.

BNZ Markets Today

Jason Wong -

US-China trade deal headlines dominated Friday trading, but even with President Trump hosing down some inherent optimism, US equities still managed to closer higher, while US Treasury yields also nudged up. The USD’s yield advantage proved to be the swaying factor in currency markets, seeing broadly based gains, driving the NZD down further and ending at a fresh three-week low.

BNZ Markets Today

Jason Wong -

Further optimism on an imminent US-China trade deal has driven US equities up to a fresh record high and driven US Treasury yields up to a 3-month high. Higher risk appetite sees JPY underperform, but the NZD’s reaction has been inexplicably muted, lagging gains in the AUD and CNH.

BNZ Markets Today

Jason Wong -

Markets have been fairly listless with modest changes across FX, equity and bond markets. The NZD has traded a less than 30pip range over the past 24 hours, hovering around the 0.6375 mark.

BNZ Markets Today

Jason Wong -

Increasing optimism on a US-China trade deal and a stronger-than-expected US non-manufacturing ISM index have driven markets, with a chunky rise in UST yields and more curve steepening. Higher US rates have supported the USD, and this dynamic has more than offset the positive news for the NZD, seeing it trade back below 0.64.

BNZ Markets Today

Nick Smyth -

Equities and bond yields headed higher overnight following more encouraging comments from US officials on Phase-One US-China trade negotiations. The USD regained some of its losses from last week but remains range-bound while the NZD continues to trade just above 0.64. NZ rates experienced another sizeable rise yesterday, with rates at the short-end reaching their highest level since the August 50bp OCR cut.

BNZ Markets Today

Nick Smyth -

It was a risk-on session on Friday with positive noises on the Phase-One US China trade agreement and stronger-than-expected US economic data lifting the S&P500 and NASDAQ to fresh record highs. There was less movement in bond and currency markets. The USD remained near three-month lows while the NZD consolidated above 0.64. The week ahead features the NZ HLFS employment survey, the RBA meeting and US non-manufacturing ISM survey.

NZ At A Glance

New Zealand At A Glance

Stephen Toplis -

The mood of the country appears to have stepped up a tad over the last few weeks. You wouldn’t describe the business sector as being optimistic but confidence levels have certainly ticked up enough to suggest the economy is approaching its cyclical low. Consequently, the risk we may face negative interest rates has reduced markedly particularly given that headline inflation now looks set to head above 2.0% within six months and the labour market remains tight. Moreover, fiscal policy looks increasingly likely to be supportive of growth over the medium term.

Rural Wrap

Food Nourishing Exports

Doug Steel -

Food exports look set to lift NZ’s merchandise exports to a record high in 2019. Further export gains are expected next year, on elevated primary product prices. Meat prices are leading the charge, amplified by the impact of African Swine Fever on pigs in China. We see NZ’s food trade surplus lifting to over $30 billion, supporting both NZ growth and the nation’s external balances.